Are We Revisiting the Savings Years?
Americans’ behaviors about money are interesting, aren’t they?
Some of us want to buy everything cheaply, but many don’t care how much any item costs if it’s desired. Some of us feel we’ll never have enough money, and others never seem stressed when they are in the red.
In his book, Pricing for Profit, Dale Furtwengler says that Americans make tradeoffs and rationalize their spending habits. “They’ll pay as little as possible for things they need, but don’t want. Conversely, they’ll pay extraordinary premiums for things they want, but don’t need.”
In our current economy, Americans are trying to save more, according to the Federal Reserve. This means we should be paying down debt and buying less to consume. But some of us remain in debt overload.
Fed economists predict U.S. spending will drop to uncharacteristic lows while our debt falls slightly in the next several quarters. But there’s always the chance we’ll find new ways to add to our debt and keep on spending. It’s hard to ignore our spending habit and instant gratification fix, especially for young people who don’t know differently. (It takes time to create a new habit, and it can be painful.)
But in order to lower our debt to reasonable levels, our savings rate would have to rise to 10% by 2018 (it has been less than 1% for several years but was 4% in the last quarter).
So…What do you think will happen?
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