Is anyone else alarmed that savings rate and economic growth have been so negatively correlated for the last 20 years? Does anyone wonder, after looking at a chart like this, if the American economy has managed to create anything “real” in the last 20 years? We like to imagine that economic growth is driven by gains in real productivity and an increasingly wealthy society, but what if the last two decades of “growth” can be attributed solely to the consumer whims of a society willing to mortgage its own future?
Here’s a perspective inducing infographic from BillShrink.com on the decline of the American household savings rate, and the mounting debt that accompanied it. On the plus side, the chart shows an increase in savings rate and dip in accumulated household debt following the ’09 credit crisis and accompanying recession.
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Whoa, not a pretty sight! Add low interest paid on savings, taxation on interest earned (now helped by our CPC, thanks), and higher personal taxation (we need more cuts here if possible), and it’s a wonder that average people can save at all.