From what I remember of econ 101, if people are saving more, that should mean more deposits in banks which should then provoke banks to lend more out - easing the credit crunch, which should then lead to more spending, etc so in the long run the extra saving should actually help the economy, no?.
Ordinarily this is true. What is happening now is that financial institutions are trying to deleverage, so that will soak up a huge amount of deposits without any extra lending at all.
Even the family's cable-TV subscription didn't escape the scalpel. "It's been killing me because I don't get the Cartoon Network anymore," says Noah, a shaggy-haired teen. "I'm missing so many new shows."
"The Capps started cutting back. In late spring, they began to trim their spending and paid down about half of their $11,000 credit-card debt. This summer, they used more than half of their government stimulus check, about $1,000, to open a savings account with an attractive interest rate of 5%."
They'd probably be better off paying off their credit card than opening a savings account.
Edit: Just got to the part that says they had already paid off their CC balance. My mistake.
As a person with some savings and some credit card debt and an uncomfortably large amount of mortgage debt, I'll say that in an economic downturn there's definitely value in having liquid cash to spend -- you can cover important debts such as taxes or mortgage during a job loss.
It's technically cheapest to run your savings as low as possible in favor of paying down debts as aggressively as possible. I was doing that a couple years ago when times were better, but for the moment the cost (a couple years of financing your savings at reasonable credit card interest rates) sure beats having your own personal liquidity crisis.
How good could that deal on eggs be to justify the time and PITA to freeze and bag 10 dozen eggs individually? Were they paying her $5 a dozen to take 'em?
What was most evil about the Reagan-Bush-Clinton-Bush era was the sociological contraction (reduction in good, stable, career-building jobs; mounting health and education costs; solidifying class barriers) that persisted in spite of impressive economic expansion. This was exemplified most poignantly by the 2000s "expansion", wherein job growth at its best was barely keeping up with the country's population increase, and salaries were stagnant except in a few industries. The average American has been in the damn recession for a long time, but now it's something deeper and it's being noticed because of its effect on "important people".
Consumer credit allowed this arrangement of economic-expansion-despite-social-contraction to continue, to the benefit of those riding (note my word choice) large corporations. People were getting poorer, less likely to find good jobs and less able to buy healthcare and higher education, but they could use a slab of plastic to buy trinkets, and this kept the consumer economy afloat, and the people in charge rich (and increasingly so).
The consumer credit rewind's bringing this arrangement to an end. This is beautiful. To those hard-working, saving Americans, keep it up!
Comparing job growth to population is a really poor measure.
What you are measuring is (on the books jobs) / (estimated population). An illegal immigrant contributes to the denominator (perhaps fractionally, depending on how accurate the census is), but not the numerator if his job is off the books.
Jobs/people fails to account for demographic change. We are getting older, and old people work less. Our bubbleicious prosperity also allowed women to stay home if they wanted.
Unemployment is a much better measure; unemployment is (# of job seekers) / (# of workers + # of job seekers). It excludes people who no longer want to work from the denominator, which counting the population does not. I don't know if/how it addresses illegal immigration, however.
[+] [-] gcheong|17 years ago|reply
[+] [-] antiismist|17 years ago|reply
[+] [-] unknown|17 years ago|reply
[deleted]
[+] [-] teej|17 years ago|reply
[+] [-] tptacek|17 years ago|reply
[+] [-] gcheong|17 years ago|reply
Even the family's cable-TV subscription didn't escape the scalpel. "It's been killing me because I don't get the Cartoon Network anymore," says Noah, a shaggy-haired teen. "I'm missing so many new shows."
[+] [-] icey|17 years ago|reply
It's scary to think that our economy was so strongly based on financial irresponsibility.
[+] [-] time_management|17 years ago|reply
[+] [-] dangoldin|17 years ago|reply
They'd probably be better off paying off their credit card than opening a savings account.
Edit: Just got to the part that says they had already paid off their CC balance. My mistake.
[+] [-] iigs|17 years ago|reply
It's technically cheapest to run your savings as low as possible in favor of paying down debts as aggressively as possible. I was doing that a couple years ago when times were better, but for the moment the cost (a couple years of financing your savings at reasonable credit card interest rates) sure beats having your own personal liquidity crisis.
[+] [-] natrius|17 years ago|reply
[+] [-] sokoloff|17 years ago|reply
[+] [-] tokenadult|17 years ago|reply
[+] [-] time_management|17 years ago|reply
What was most evil about the Reagan-Bush-Clinton-Bush era was the sociological contraction (reduction in good, stable, career-building jobs; mounting health and education costs; solidifying class barriers) that persisted in spite of impressive economic expansion. This was exemplified most poignantly by the 2000s "expansion", wherein job growth at its best was barely keeping up with the country's population increase, and salaries were stagnant except in a few industries. The average American has been in the damn recession for a long time, but now it's something deeper and it's being noticed because of its effect on "important people".
Consumer credit allowed this arrangement of economic-expansion-despite-social-contraction to continue, to the benefit of those riding (note my word choice) large corporations. People were getting poorer, less likely to find good jobs and less able to buy healthcare and higher education, but they could use a slab of plastic to buy trinkets, and this kept the consumer economy afloat, and the people in charge rich (and increasingly so).
The consumer credit rewind's bringing this arrangement to an end. This is beautiful. To those hard-working, saving Americans, keep it up!
[+] [-] yummyfajitas|17 years ago|reply
What you are measuring is (on the books jobs) / (estimated population). An illegal immigrant contributes to the denominator (perhaps fractionally, depending on how accurate the census is), but not the numerator if his job is off the books.
Jobs/people fails to account for demographic change. We are getting older, and old people work less. Our bubbleicious prosperity also allowed women to stay home if they wanted.
Unemployment is a much better measure; unemployment is (# of job seekers) / (# of workers + # of job seekers). It excludes people who no longer want to work from the denominator, which counting the population does not. I don't know if/how it addresses illegal immigration, however.