Reconciling assholes for nearly a decade.

US Savings rate at statistical zero

http://www.suntimes.com/output/wiles/cst-fin-savings14.html

The typical US family, according to the goverment, had their savings rate reach zero in June. Meaning that on a cash basis, they spent every cent they took in.

Consumer whores? Or just taking advantage of GM's employee discount pricing?
Permalink example 
August 17th, 2005
>> Actually, Americans did set aside about $1.9 billion for the month in savings accounts -- about $6 for every man, woman and child.

Stop this fear mongering! People have saved infinite amounts more than you suggest!

Or perhaps it's "undefined amounts more."
Permalink Pseudo Masochist 
August 17th, 2005
If the average American wage earner makes $2500 per month (before taxes, etc), saving $6 that month is 0.24% of their salary, which is essentially a rounding error.
Permalink example 
August 17th, 2005
Quit jacking up the gas prices, cable bills, internet access, Big Mac's, movie tickets, etc. and then maybe we'll be able to save more.
Permalink  
August 17th, 2005
Not to mention that $6 is probably better spent than saved due to inflation versus interest.
Permalink I am Jack's infinite id 
August 17th, 2005
Actually, it could be considered worse... in some housing markets - here in DC for example - people who would normally have a couple years of equity in a home have cashed out and upgraded. Therefore, they have little to no equity in a home which has increased in value by atleast 20% every year for the past 3-5.

So once place where they would be saving money is not happening...

And then there's those of us that due to LLC organization rules (revenue = income, even if it goes back out in wages), we are classified as the "super-rich" and STILL can't afford to buy a freakin' condo.
Permalink KC 
August 17th, 2005
If they merely spent every cent they took in, that is a HUGE improvement over the last 4 years during which the average family got deeper in debt. Things are looking up!
Permalink Rich Rogers 
August 17th, 2005
My only question about this is how is housing counted in this?

A lot of people are plowing a lot of money into mortgage payments, with the hope that home prices will continue to rise. Is that counted as saving or spending?
Permalink Jim Rankin 
August 17th, 2005
KC, as a separate topic, this cash out and upgrade thing is madness. I cashed out and downgraded and now I'm sitting pretty.
Permalink Rich Rogers 
August 17th, 2005
>> My only question about this is how is housing counted in this? <<

The goverment doesn't count home equity as savings. Nor do they count rises in stock prices (once you sell, that then counts as income).
Permalink example 
August 17th, 2005
If home equity and stocks are not counted, how valid is this statistic given the ridiculously low rates on saving accounts?
Permalink Gerald 
August 17th, 2005
"Americans not stuffing cash in mattresses. Film at 11."

I wonder if 401k's were counted, or other allotments to savings programs.

Philo
Permalink Philo 
August 17th, 2005
Good point. A lot (all?) of these government statistics are just bogus nonsense when you start looking at what information they choose to include or exclude from year to year.
Permalink Rich Rogers 
August 17th, 2005
All this borrowing against home equity is going to ruin a lot of people when the housing bubble bursts, which we know it eventually will, according to economist Paul Krugman, op-ed writer for the NY Times.

Let's face it - a lot of people spend way more than they need to. Who really needs a $30,000 SUV to commute to work every day? A $12,000 used sedan would do just as well and costs less in gas and insurance. And here in Connecticut, families of four are living in 3,000 sq. ft. "McMansions" that cost upwards of a half-million dollars ... couldn't four people manage to squeeze into a house half that size and still have enough room? Conspicuous consumption ... I don't get it. They're probably all in debt up to their eyeballs.
Permalink Dana 
August 17th, 2005
Most people here in Silicon Valley are in debt up to their eyeballs - literally. I'm just waiting for all of them to lose their shirts in the next year.

When the 2001 crash hit, there were at least 1-2 moving trucks *A DAY* coming in and out of my apartment complex, and they weren't moving in either...

I see a lot of $30,000+ SUV's and other "not so mini" vans all over the place. Just nuts. They get some huge car to move two grocery bags, when a simple Honda civic would do the task just fine. Then these same people whine about gas prices, traffic and their 2+ hour commute to/from their McMansion home and work.

Rich, good for you. Downgrading is a good thing. I figure why pay a huge amount for an "upgrade" when I can get a smaller place and be sitting on more money?
Permalink QADude 
August 17th, 2005
Hey, you only live once. Supersize me!
Permalink  
August 17th, 2005
I follow my governments example. Debt spending is good. Irresponsibility is good.
Permalink son of parnas 
August 17th, 2005
Thanks, I went from around 2500 sq ft. to 1400. I now spend far less time vacuuming and the 7 figures I pocketed cashing out makes me a lot more free to take on projects that interest me.
Permalink Rich Rogers 
August 17th, 2005
"All this borrowing against home equity is going to ruin a lot of people when the housing bubble bursts, which we know it eventually will, according to economist Paul Krugman, op-ed writer for the NY Times."

HAHAHA... There are a number of brokers who *actively* invest in the exact opposite of what Krugman says and they've been doing pretty well for years now.

Hell, they guy doesn't even seem to understand basic Supply and Demand. He's a political schill.
Permalink KC 
August 17th, 2005
<<The goverment doesn't count home equity as savings. Nor do they count rises in stock prices (once you sell, that then counts as income).>>

that's retarded.
Permalink Kenny 
August 17th, 2005
Not really. Savings are, by and large, meant to at least not decrease Stocks and asset values may go down as well as up.
Permalink Simon Lucy 
August 17th, 2005
>> "All this borrowing against home equity is going to ruin a lot of people when the housing bubble bursts, which we know it eventually will, according to economist Paul Krugman, op-ed writer for the NY Times."

I thought that this article exaggerated the size of the predicted crisis that will occur when the real estate bubble bursts.

In the 1990s the Dow Jones grew 5.5 times (from about 2,000 to 11,500) and the high-tech boom added fuel to the fire. Then, in 2000 - 2001 the stock market dropped to 7,500.

Since then the stock market has been growing slowly and now it is only about 10,500 which is still far from the previous peak of 11,500. The reason for the relatively slow growth of the stock market is that many investors decided to invest in real estate instead of in stocks and also their general caution after the corporate scandals.

Of course, there are mutual funds that invest in real estate and many companies manufacture housing products, so a bubble burst can have some effect on the stock market.

On the other hand, maybe if the housing market stops being an attractive investment, investors will return to invest in the broader stock market while dumping their real estate.

So, in the case of a bubble burst the impact may not be as bad for the broader stock market.
Permalink Yoey 
August 17th, 2005
"And here in Connecticut, families of four are living in 3,000 sq. ft. "McMansions" that cost upwards of a half-million dollars ..."

Uh, when was the last time you looked at housing prices? I'm sure a lot of places in Connecticut (part of the greater NYC housing market) a half-million dollars barely buys a modest home, if that.

Kinda like Dr. Evil "I demand from the governments of the world, one MILLION dollars!"
Permalink Jim Rankin 
August 17th, 2005
++Conspicuous consumption ... I don't get it.

What's not to get about keeping up wiht the Jones'?

I have bigger/better stuff than all my neighbors so I _must_ be a bigger/better person, right?

It is more amazing to me that there are people that understand the psychology of this and account for it, people that understand it and do not account for it, and people that just plain do not get it.
Permalink I am Jack's infinite id 
August 17th, 2005
"What are you wearing on your feet?"
"A pair of Mall Walkers"
"I'M KEEPING MY LIPS!!!!"
Permalink Philo 
August 17th, 2005
> "I'M KEEPING MY LIPS!!!!"

50,000 "Who's Line Is It Anyway?" points for the Bloom County reference. That's 0.02 in Euros.
Permalink Dan Rowan or Dick Martin - your choice 
August 17th, 2005
"They get some huge car to move two grocery bags, when a simple Honda civic would do the task just fine. Then these same people whine about gas prices, traffic and their 2+ hour commute to/from their McMansion home and work."

If you're going to have to spend 2 hours in the vehicle, you might as well be comfortable.
Permalink KC 
August 18th, 2005
i save 5% of my gross paycheck a month...put it here

http://www.gmacfs.com/notes/demand/main.htm
Permalink Yo 
August 18th, 2005
Hmmm unsecured and uninsured funds, nice.
Permalink Simon Lucy 
August 18th, 2005
Well, the good news about the GMAC demand notes is the interest rate is pretty high. The bad news is that it's that high because their bonds got downgraded by Moody's to "junk" status.
Permalink example 
August 18th, 2005
I get a higher rate just investing my money in Mexican banks.
Permalink Rich Rogers 
August 18th, 2005
example,
no that GM automotive who is rated as junk.

GMACFS is a different company
Permalink Yo 
August 18th, 2005
> Quit jacking up the gas prices, cable bills, internet access, Big Mac's, movie tickets, etc. and then maybe we'll be able to save more.

Quit demanding that we jack up your wage and we'll be able to afford to keep the business running without increasing our revenue. Sure, we could replace half the staff with robots and save on wages, but then half of you will be rioting because you lost your jobs in order to avoid us jacking up prices like you demanded in the first place. Incidentally, exactly how much of your credit card debt is for essentials and how much is for toys to go in your SUV? How much do you think you could save if you got off your lazy ass and rode a bicycle to work instead?

Sincerely,
The management.


Inflation annoys everyone, but it's a two-way street.
Permalink  
August 18th, 2005
That argument works great, blank, except that it's nearly utter bullshit. Product prices (ie, revenue) always goes up before (and a great deal more) than salaries, in general.
Permalink muppet 
August 18th, 2005

This topic was orginally posted to the off-topic forum of the
Joel on Software discussion board.

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