Spend, Baby, Spend —or We're Sunk

Savings rate jumps over job, portfolio fears

(NEWSER) - 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. More»

(NEWSER) - Wall Street and Washington financial gurus may be seeing “green shoots” of economic recovery, but small businesses are still stuck in the mud, Kevin Kelly writes in Newsweek. Kelly, the CEO of a bag manufacturing company, says too many colleagues' businesses are losing sales, laying off workers, or shutting down altogether. “Call us pessimists, but we're not sure the green shoots aren't just weeds,” he writes. More»

'Frugalistas' embrace new thrifty values

(NEWSER) - Shredding credit cards and buying less may sound like consumer America's version of hell, but some—especially those penny-pinchers long scoffed at as miserly—are downright gleeful. "This validates the choices I've made," one tells the New York Times. With the savings rate up a remarkable 4 points since fall, "frugal living" groups have become the rage and stylish "frugalistas" have invaded the fashion world. More»

How to stimulate the economy without draining your account

(NEWSER) - While leaders encourage Americans to stimulate the economy by spending, those who have lost jobs or investments are a lot more inclined to hoard their remaining assets. But there's a way to avoid this "paradox of thrift," in which the frugal behavior that's best for an individual ends up hurting the economy at large. In the New York Times, David Leonhardt explains: More»

Sharp rise in savings rate expected to lengthen recession

(NEWSER) - Americans worried about the recession are stashing away cash at the highest rate in decades—but economists fear that the thrift will prolong hard times, reports the Wall Street Journal. The national savings rate has rebounded from less than zero to levels expected to hit 5% or higher this year just when consumer spending is needed most. More»