Economist Peter Hooper and a team of experts from Deutsche Bank in a research note on Wednesday considered the problem of growth of the savings rate of Americans, as well as the possible consequences of this phenomenon for the US economy.
Over the last two quarters of decreased growth, in addition, marked reduction in consumer spending. In annual terms, they decreased from 3% in the third quarter of 2015 to 1.9% in the first quarter of 2016. Our analysis shows that while the savings rate of Americans stabiliziruemost or even decline slightly, we are unlikely to see a sharp decline, thanks to which could increase consumer spending. Thus, despite the fact that in the coming quarters, consumer spending probably will probably increase, they still remain fairly modest.
Remaining at the level of 5.4%, the savings rate remains at its historic low. However, the recent surge spooked economists not only because of the decline in oil prices, but also because of the tension on the labour market.
The basic idea here is that if you save money on gas, you are going to spend if you had no income, and then he appeared, just as you have to spend appeared money.
Experts have repeatedly reported that the increase in the savings rate is problematic for an economy based on consumer spending.
Consumer spending accounts for approximately two-thirds of US GDP growth. Despite what is becoming a consumer: food, clothing, appliances, services. But the math is simple: more savings and less costs, and therefore lower economic growth.
However, the economic community to reflect on why growing savings rate.
In its report, Deutsche Bank has submitted a schedule, which is clearly reflected in the preference of Americans to save, and not spending funds in the financial crisis.
And this makes sense.
All asset types fell in value during the financial crisis. In particular, we are talking about the housing prices, which are the main driving force of consumption. It is easy to understand why the Americans are gone from wanting to spend and have started to save money in equal proportions, saving you $2 for every $1 spent.
One of the curious mysteries of the current phase of economic growth is more moderate role assigned to the user. Despite the seemingly favourable conditions aimed at improving conditions in the labor market, increasing wages and reducing energy costs, consumer spending does not increase at the pace that you would expect. Instead, consumers just continue to accumulate profit from wage increases and lower energy prices.
Now think about it: if someone has less money today, and more tomorrow, this man is likely to want to spend more money.
In addition, due to the strong labor market, it seems, created the conditions for a greater number of Americans, which in turn will allow them to increase their spending.
However, the idea that the American consumer would prefer to save and not to spend extra income for just a few years after the worst recession since the great depression doesn’t sound that crazy. In order to compensate for the loss, the idea of “more savings” – this is the simplest solution that you can take.
One of the possible explanations of the growth of the savings rate is the continuing desire in the direction of greater economy, regardless of level of wealth, interest rates and other factors… This desire could arise on the background of the fact that the macroeconomic environment became more risky after the financial crisis.
