Even after the economy rebounds, the US will likely remain a nation of penny pinchers—and that has economists worried, the New York Times reports. Consumer spending accounts for 70% of the country’s GDP, but Americans, fretting over job security and losses in the housing and stock sectors, are squirreling away more of their after-tax income in unprecedented fashion.
Americans spent more than they earned in 2005, but now the savings rate tops 4%. That upward trend is likely to continue post-recession because easy credit and soaring asset values, two forces that bolstered spending, may be permanently changed. Still, some economists insist thrift will boost the economy in the long run by encouraging investment and raising living standards.