Calculated Risk Gets It...
Blog Post
March 3, 2009
Thanks to Andrew, I noticed that Calculated Risk (what's the right term for CR anyway? Invaluable? Indispensable? Wicked awesome?) has a post up looking at the latest data on personal income and the Personal Savings Rate. Personal Savings, a flawed measure, but an important one nonetheless, continues its rebound, from 3.9 percent in December to 5.0 percent in January.
Here's the graph:
We aren't yet near historical norms, but we're starting to claw our way back up toward a meaningful PSR. And unlike so many folks who think this is a problem (ahem, AP), CR really nails what this means:
"Although this data may be revised significantly, this does suggest households are saving substantially more than during the last few years (when they saving rate was close to zero). This is a necessary but painful step ... and a rising saving rate will repair balance sheets, but also keep downward pressure on personal consumption."
Families are making rational choices for themselves, and in the long run that's always going to be the right thing to do. Yes, it'll hurt some in the short run, but there's so much hurt to go around right now we shouldn't be shaming folks that are trying to make the right decisions for their families.