On American families save money
Rick and Noreen Karp recently reduced their credit card debt, open a savings account, and stop their two children to restaurants. Jessica and Alan Muir began to buy children's clothes in the steep price cuts, split most of the food purchases with other families and gathering their firewood instead of buying the $ 200 line. As layoffs and closing the Boise grip shop, these two local families hope their new found frugality will see them through the economic downturn. However, this same thrift, by the United States around the family to accept, is also an important reason for the recession may not end soon. Americans set off a buying frenzy decadeslong fresh, and finally more savings, reduce costs as the economy needs their money. Under normal circumstances, thrift is beneficial to the individual and the economy. Savings as the reservoir of capital, can be used to finance investment, which helps to improve the living standards of a country. But the economic recession, increased saving or its other side, cut spending may exacerbate the economic difficulties. This is what economists call the 'paradox of thrift. 'U.S. household debt has been growing steadily, the Fed began tracking in 1952 it refused to in the third quarter of 2008 for the first time. In the same quarter, U.S. consumer spending growth rate for the first time in 17 years. This has resulted in the personal savings rate, the Government calculated as the difference between income and expenditure to rise. In recent years, American spending beyond their income, the personal savings rate fell below zero. Economists now expect interest rates rose to 35% or even higher, since World War II in 2009, the single greatest reversal. Goldman Sachs last week predicted the 2009 saving rate of up to 610%. As savings increase, economists say, may further reduce spending. They are expected to gross domestic product fell at least in the annual rate of 5 percent in the fourth quarter, the biggest decline in a quarter of a century. 'Concept, American families will soon be through the current economic recession is a fantasy. This does not happen, 'said Elizabeth Warren, a law professor at Harvard University last month was appointed as the Chairman of the Congressional Oversight Panel monitoring the government's Troubled Asset Relief Programme funds allocated tasks. In Boise, like the Capps and the Moores family members to explain the paradox. Metropolitan areas in the Rocky Mountains at the foot of one and a half million people, is for electronics manufacturers, such as computer chip maker Micron Technology, Inc. in the region to withstand the early 1990s and the recession in 2001, the unemployment rate remaining base far below the national average. But now people here are socking away money, they will have time to spend, some no shops, restaurants closed down, the unemployment rate rose to contribute. Cut marks particularly profound transformation by the Moores and their peers. Buying frenzy in the United States in recent years, the most profligate squandering of the people under the age of 35. In 2006, for every $ 100 earned the Americans, they spent about $ 117. Those age 3555 negative savings rate is almost as large. Americans only 55 years old, who has maintained a high doubledigit savings rate, a large number of whole to maintain in the savings rate above zero, the data and the Fed, according to Moody's Economy.com. There are several factors driving the savings rate, including more stringent restrictions on credit and home lending. Consumer credit growth slowed to 1.2 percent, annualized, in the third quarter, the Fed said, well below the 3.9 percent rate of decline in the previous quarter.