We have occasionally followed new reports on the economic condition of the public and the news is rarely good. After an extremely very poor jobs report, a new study found that twenty-eight percent of Americans have nothing in their savings accounts and another 21 percent have no savings account at all. Only 29 percent has $1,000 or more in their accounts.
The recent survey by America Saves, as part of a campaign from the Consumer Federation of America, surveys 1,000 people three times per year for its Personal Savings Index.
Not surprisingly, top earners continue to sock away savings — 84 percent of people who earn more than $100,000 annually reported to be interested in saving compared with 72 percent of people with annual incomes between $50,000 and $75,000 and 68 percent of people who earn less than $25,000.
The economic situation in this country is far worse than most people appreciate. We live in economically stratified areas where there is little interaction between distant economic classes. These reports are a startling wake up call for policy makers. The goal of everyone having a few months cushion for bad times is clearly not occurring — leaving at least half or more of the population on the razor’s edge of poverty.
Source: CNBC
And as long as we are on the subject of policy – and Turley has given us little to chew on today –
Oh yeah…..heck yeah…..let’s digress into things that have nothing to do with THIS topic and completely threadjack this thread too…….look SQUIRREL!!!!
Topics that will soon come up abortion, gun control, ……I know!!!! Let’s discuss the recent change in the food nazi recommendation about fat. That is about as relevant to the topic of economics and savings as anything else.
http://cdn.iwastesomuchtime.com/October-18-2011-20-12-49-DoubleFacePalm.jpg
Not a word about this?
“Afghanistan: Enough. Even war has rules.”
“MSF calls for State activation of the International Humanitarian Fact-Finding Commission to investigate Afghanistan bombing”
7 October 2015
http://www.msf.org/article/afghanistan-enough-even-war-has-rules
“Today we are fighting back for the respect of the Geneva Conventions. As doctors, we are fighting back for the sake of our patients. We need you, as members of the public, to stand with us to insist that even wars have rules.”
And as long as we are on the subject of policy – and Turley has given us little to chew on today –
Alabama requires voter ID in order to vote. So they have closed 31 DMV offices. All are located in locations with heavy African-American populations.
And Clinton should never be forgiven for repealing Glass-Steagall.
And ‘historians’ here need to be reminded it was signed by FDR. Just another horrible Democratic policy – like Social Security and Medicare.
In contrast, the Republicans have given us……..?
Sorry. That should read
Keynesianism and Obama and the Democrats saved us from a Second Great Depression in 2009.
Keynesianism saved us from a Second Great Depression in 2009.
Sometimes I think Mr. Turley’s kids write the post.
The grammar!
Savers do not make a good economy.
Americans have always been lousy savers. Americans are first-rate consumers.
The Japanese are GREAT savers and their economy has been struggling for years.
With current interest rates generating a NEGATIVE return, why should people save in the traditional ways, savings account, certificates of deposit, bonds? You would be a fool to put very much money into those vehicles. You would be an IDIOT to buy bonds or any long term fixed rate investments at this time.
Yes, people should have some cash on hand to pay the bills, the rent, buy food. Your long term investments are better off in hard assets and some in the stock market where at least…..for now anyway…..there is some possibility of a positive return.
Other commenters up stream also touched on one of the main reasons that people do not have cash savings or investments. They waste their money. They do it in small ways that add up. In my profession we had a term called the Latte Effect. It was a story we would use to tell young people to encourage them to save. Not trying to hawk his book but here is a link. http://www.finishrich.com/lattefactor/
After having “the discussion” about the wasted money daily and how much it could possibly add up if invested systematically the younger clients were shocked. Lattes are just a symbol but if you can cut down your daily expenditures by forgoing that $5 latte and not going out to lunch 3 times a week (about $40 at least!) you could save about $75 to $100 a week in excess spending. Money that even if you just put it into a can in the backyard could add up to about $5000.
People are not frugal anymore.
Negative return and inflation are also the huge issues especially for those who are working in marginal jobs and who are living from paycheck to paycheck and have not even the discretionary cash to spend on a latte (for example). Every penny is going to things so that you can just survive. Until the costs of rent, food, transportation, utilities are under control the idea of savings is just a pipe dream for many.
For accuracy in discussing ‘control’ of the US government during the Obama administration, one should keep in mind:
The Republicans gained control of the House in 2010.
The Democrats lost the necessary 60 vote majority (to defeat a filibuster) with the death of Ted Kennedy in summer 2009.
When discussing economics it is important to keep in mind the House (which the Democrats lost in 2010) controls the purse.
The definition of ‘small business’ is very broad. My guess is that most do not understand that the small business Obamacare requirement does NOT kick in unless that business has 51 full time employees.
ModernMiner has a point.
What are the American workers doing with their money?
When I used to work at Walmart, I witness low-income workers using their tax-refund checks to pay for big screen TVs, computer games and systems, etc. Selling their food stamps for cash (on the parking lot), and using their money to take care of young adults (usually it is the young males who refuse to work. I have seen grandparents using their social security checks to bailout a grandchild who is in and out of jail) who refuses to work). Paying $80-$100 a month for a cellphone and/or cable, and not trying to put at least 2%-3% into Walmarts savings/retirement plan, not wanting to ‘better themselves’ by going to college or trade school, or not wanting to move up the latter (for example, at Walmart, you don’t need a college degree to become an Assistant Manager whose starting salary is at least $50k. They are always hiring for assistant managers!) in a company or organization (some Walmart workers even commented by stating: ‘if I worked more hours or advance to a higher position, then I will lose the amount of food stamps or disability check that I receive for my child. Plus I would have to work harder, find child care arrangements, etc’).
Middle-income families (households with income of $68k and up, with a family of four) are in the same boat: not wisely spending their money. This includes financing a 4bd room, 2.5 bath home for $250-$300k, instead of $140-$160k (or you can purchase a foreclosed or short sale home for way less, and add a few thousands of dollars to fix it up). Purchasing luxury vehicles, taking out student loans to just to attend the top 25 schools in the country, wasting money on the best furniture, spending money on sending their young children to private schools, seasonal tickets to ball games, etc….
We already know how the upper-income families spend (waste) their income.
There is a flip side to all of this…..
Our economy needs all income workers to spend, spend, spend. Imagine if all these workers started using their money wisely? Our economy would collapse over night. Millions of people would be out of work (casino workers, luxury car employees, bankruptcy courts and their attorneys, fast food and restaurant workers, workers of credit card and loan companies, alcohol and tobacco companies, credit repair specialists, and maybe even healthcare workers, since people would start wisely using their money to maintain a healthy lifestyle?).
It is a no win situation……….
Democrats have made plenty of mistakes–Clinton signed the repeal of Glass Steagal, and he took anything Alan Greenspan said seriously.
If the minimum wage had kept pace with inflation it woul be somewhere between $17 and $21 per hour.
Every financial transaction is a redistribution of wealth. We have all just passively decides that it’s OK it all shifts to the top 5%-ers.
Eliminate right to work laws.
Medicare for all.
Raise the minimum wage to $20.
The poorest area in America, is Pine Ridge Indian reservation, South Dakota. From the pictures I see, refugee camps in a war zone have better amenities.
Several people have mentioned low interest rates, as if they were just an environmental factor, but they are part and parcel of the Fed’s decision to keep the federal funds rate low. The stock market has been artificially inflated through quantitative easing also discourages people from keeping money in savings.
It’s no accident that inequality has grown under this administration; President Obama’s choices regarding monetary policy, overregulation, and taxes lead directly to the result.
“It’s no accident that inequality has grown under this administration; President Obama’s choices regarding monetary policy, overregulation, and taxes lead directly to the result.”
News Flash: the president does not set monetary policy. Monetary policy is set by the FED.
BTW, there is pretty good evidence that the great recession of 2007-2009 was caused, or at least exacerbated, by excesses in the financial industry due to deregulation.
It is the successful effort of the very wealthy to end the middle class and the last resistance to its full control of the country.
I thought the japs ended it when they bombed Pearl Harbor before Hitler declared war on the U.S.
Even great republican economists can be wrong.
Keynesianism failed horribly this time.
@Nick “Hitler ended the Great Depression when he declared war on the US.”
There is a lot of truth in that statement.
If no one noticed, WWII was financed with deficit spending which ended the lingering downturn from the depression. And, BTW, for the next 3 or 4 decades the country did pretty good after all that deficit spending.
“Keynes was, of course, completely wrong. That’s why we are still in a stagnant economy despite the “stimulus” and “quantitative easing” and near-zero interest rates.”
Even John Taylor the great republican economist doesn’t think that.
Even Greg Mankiw another republic economist teaches a pretty standard version of Keynes in his text book.