Transcripts

Saving Rates Have Hit A Depressing Low

JEFF YASTINE: If you spent today at the stores, you may think you saved a lot, but Americans aren't saving these days, at least in real terms. The personal savings rate has been on the decline and is now at levels not seen since the great depression. And as Stephanie Dhue reports, that has economists worried.

STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Ask Americans what they save and chances are you may get an answer like this.

UNIDENTIFIED FEMALE: It was $25, but I got it for $17, so I really saved.

DHUE: And consumers have been trained to look at their receipts to figure out how much they saved. The message that you can save by spending is easy to find and America's consumer culture may help explain why the personal savings rate is now in negative territory. Other explanations for the decline in personal savings are that people no longer have to save for a rainy day because they have insurance to bail them out. And recently, homeowners have let rising property values do their savings for them. But many economists worry the downward trend in savings will be a drag down the road.

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ECONOMY.COM: It means that we're not saving. Therefore it's going to be more difficult for businesses to invest or at least more costly. Less investment means ultimately slower productivity growth and that's key to the growth in our living standard. So bottom line, less saving means slower growth and lower living standards.

DHUE: Consumers do boost the gross domestic product with their spending. But shopping 'til you drop isn't the best way to keep the economy humming.

DOUGLAS HOLTZ-EAKIN, ECONOMIST, COUNCIL ON FOREIGN RELATIONS: We train people that because households are 70 percent of spending, that if they don't go out to the stores, the economy is going to collapse. It's really not true. If the households didn't do that spending, you could shift that spending to investment spending, which would build the capacity for the future or we could shift it to exports and reverse some of our borrowing from abroad.

DHUE: Economists say it will take creative policy proposals beyond the current tax incentives to boost the personal savings rate. It will also mean thinking of holiday savings in different terms. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Alexandria, Virginia.