Is there a revolution in American saving?

Tatom, John (2009): Is there a revolution in American saving? Published in: Networks Financial Institute Reseacrch Buzz 5 5 (2009): pp. 1-5.

Abstract

The personal saving rate spiked up to an unusually high level in 2008 and spring 2009, prompting many observers to suggest that the financial crisis has created a new thrift ethic, reversing decades of decline in U.S. saving to near zero. The depth of the recent financial and economic crisis has prompted many to believe that there has been a sea change in attitudes toward regulation, independence and personal responsibility and that a permanent rise in saving behavior has taken place. There are many reasons for personal saving to have surged recently, however, and most of them are very temporary, especially the Obama tax cut, so it is not likely that the personal saving rate will persist at a higher level. Betting on fundamental changes in behavior is a risky, dare we say foolish, business in the absence of more fundamental change in the economic environment or incentives.

• Item Type: MPRA Paper
• Language: English
• Keywords: Saving; Financial crisis; Personal saving rate
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E21 - Macroeconomics: Consumption; Saving; Aggregate Physical and Financial Consumer Wealth

References

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Friedman, Milton, A Theory of the Consumption Function, National Bureau of Economic Research, NBER General series, no. 63; Princeton: Princeton University Press, 1957.

Kansas, Dave, “Back to the (Thrifty) Future,” Wall Street Journal, June 8, 2009, p. R6.

Lusardi, Annamaria, ed. Overcoming the Saving Slump, Chicago: University of Chicago Press, 2009.

Time Magazine, “The New Frugality,” Time Magazine Special Report, April 27, 2009, pp. 20-31.