Spendthrift Americans aren't doing themselves any favors these days. In fact, the U.S. savings rate is in negative territory - at its LOWEST level since the Great Depression.
The Commerce Department reports that the average U.S. household didn't save so much as a penny last year, as Americans either accumulated more debt or dug into the savings they had to pay bills and buy goods.
On average, Americans used 0.5% of their savings to help keep their finances in the black in 2005.
"The savings rate in the United States hasn't been this low since the Great Depression," said a Tuesday editorial in the Cincinnati Enquirer.
"But back in 1932 and 1933, unemployment was rampant, and many families had to break the piggy bank just to keep food on the table. This time, the analysts are saying, Americans seem to be spending money they don't have just to maintain a lifestyle to which they've become accustomed."
But the Associated Press describes the situation in a decidedly harsher manner, saying that "Americans seem to have the feeling that it is wimpish to save.'
The Enquirer reports that the low savings rate may be a result of Americans not having enough money to meet their ongoing financial obligations.
According to the Washington-based Center on Budget and Policy Priorities, during the past 20 years the gap between the wealthiest 20% of Americans and everyone else has expanded significantly.
"The biggest cause of rising income inequality over the past two decades has been the erosion of wages for the 70% of workers with less than a college education,' the report states. But even white-collar workers aren't immune.
"More recently, even college-educated workers have experienced real declines in wages, in part because of offshore competition.'
It all spells trouble for the U.S. economy, as two-thirds of gross domestic product are influenced by consumer spending.
"Regardless of the reason, the failure of Americans to put even a little money away is going to spell trouble, if for no other reason than the fact that nearly 80 million Baby Boomers are turning 60 this year and many of them are heading toward retirement with nothing to live on but Social Security," says The Enquirer.
Congress could help by stabilizing Social Security and working to bring soaring health-care costs back to earth. But the bulk of the burden falls on real Americans, the paper says.
"If you are so inclined, your best bet is probably the tried and true. Live within your means, put a little bit away each week and invest it prudently. That way, when it comes time to pay for college or retirement or the fix for the leaking roof, you might not have to reach for the credit card."
PS: Also interesting how for the first time, a war (Iraq) hasn't helped our economy...
