COMMUNITY MATTERS
		Americans Have Negative Savings for Second Year in A Row

Last December consumer spending rose a solid .7 percent, which was the best showing in five months. That’s the good news. Now the bad news: for the past two years consumers have spent everything they made and then some, pushing the personal savings rate to the lowest level since the Great Depression, according to the U.S. Department of Commerce.

The savings rate for all of 2006 was a negative one percent, meaning that not only did people spend all the money they earned but they also dipped into savings or increased borrowing to finance purchases. Consumers spent $116 billion more than they earned in December alone. The poor 2006 savings rate follows on a 2005 savings rate of negative 0.4 percent, which (until 2006) was the poorest since a negative 1.5 percent savings rate in 1933.

According to Department of Commerce data, only four times in history has the savings rate been negative for an entire year—1932, 1933, 2005 and 2006. However, the reasons for the recent declines are vastly different from those of the Depression era. During the Great Depression one-fourth of the labor force was without a job, so people dipped into their savings to meet the basic necessities of shelter and clothing. (Read the full article)
 
 Deborah Bayle Nielsen
 President and CEO