Gallup’s April 3-6 Economy and Personal Finance poll, finds that the majority of Americans continue to enjoy saving money more than spending it, by 62% to 34%. The 2014 saving-spending gap is the one of the widest since Gallup began tracking Americans’ preferences in 2001. Here is the chart.
Aspiring to save rather than spend is progress over the mindless ‘spend your way to bankruptcy’ model led by Greenspan from 2003 to 2007. But the longing to save is not necessarily a reflection of reality since saving rates have in fact been dropping again over the past 2 years. Still struggling to pay down high debt levels amid stagnant wage growth, the masses have developed a keen sense of their financial vulnerability–they feel it in their bones. At the same time, their best interests and wise urge to build up savings stands in direct conflict with Central Banks’ and their preoccupation with enticing people to continue borrowing and spending in order to buoy bank profits and force consumption.
“On a macro level, economists would typically view increases in personal consumption as a positive sign of an improving economy. But if the increases in spending are occurring out of necessity, not desire, and Americans take on more debt or deplete their savings, the picture may not be quite as rosy. Data from the U.S. Department of Commerce show that the 2013 average personal savings rate was 4.5%, the lowest since 2007 and low historically. The U.S. average personal savings rate in the 1970s was 11.8%, 9.3% in the 1980s, and 6.7% in the 1990s.
Stagnant wage growth and the overall sluggish recovery from the Great Recession perhaps have contributed to decreasing personal savings. While Gallup data indicate a stronger preference to save than to spend, in reality Americans seem to be having difficulty putting together a safety net. This has more than likely contributed to the lingering pessimism about the U.S. economy.”