retail news in context, analysis with attitude

The New York Times reports on a new government study saying that Americans are saving more than ever: “Consumers saved 6.4 percent of their after-tax income in June, and that this savings rate had shot up as high as 8.2 percent in May 2009. Before the recession, the rate had hovered at 1 to 2 percent for many years.”

The big question is whether “America’s newfound love affair with frugality will continue and whether families’ reluctance to spend will hold back economic growth,” the Times writes.

The bad news doesn’t just concern economic growth. According to the Times, “Along with high unemployment, high debt levels continue to discourage consumer spending. American households, though borrowing less, still are paying for their free spending ways in the credit bubble of the mid-2000s. Their debt levels are far higher than they were in the 1980s and 1990s, when they had less than a dollar of debt for every dollar in disposable income.”
KC's View:
Doesn’t sound like a recipe for big spending to return anytime soon. It all depends on the jobs situation, with even people who are employed being careful because, well, you never know.