I have been tracking the savings rate on this blog for some time. What has been obvious to me and other observers is that the U.S. has had a declining savings rate since the secular bull market in bonds and shares began in the early 1980s. Indeed, it seems likely that there is a correlation between asset prices and savings rates in the United States.
However, we have now experienced a spectacular bust in asset prices. Many pundits including myself expect a secular shift away from consumption toward saving. However, the data do not show this shift. In fact, after peaking this past Spring at 6.4%, savings rates have plummeted to 3.1% in the last month. What gives?
Well for one, asset prices have skyrocketed since then. And it does seem that the prior correlation between asset price incr...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.