From: Marktcards (84.92.179.110)
Subject: US savings rate sinks to lowest since Great Depression
Date: January 31, 2006 at 3:42 am PST

Americans spent $42bn (£24bn) more than they earned last year,
turning the annual US savings ratio negative for the first time
since the Great Depression.

The savings ratio fell to minus 0.5 per cent last year, meaning
Americans not only spent all of their after-tax income but also
had to increase their borrowings or plunder their savings. This
is the first time theratio has gone negative for an entire year
since 1932 and 1933, when the US was struggling to cope with
the Great Depression.

The savings ratio is seen as a key economic indicator as it
shows how vulnerable households are to a sudden shock such as a
surge in interest rates or unexpected redundancy. Mark Zandi,
an economist at the analysts' website Economy.com, said the low
level of savings would became a problem only if interest rates
continued to climb.

• article

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