Watch out, world: Americans are saving again

Excellent issue, excellent analysis...thanks, makloda.

Watching the U.S. consumer and business pull in their horns and stash their cash in such a stingy manner, while the fed pumps mass amounts of liquidity into the financial system - it reminds me of the old adage about an unstoppable force running into an unmovable object.

I think deflation wins out at the end of the day as the psychological devastation of mass job losses, home value declines, 401(k)/IRA/Pension Fund losses, etc. is greater than it's been in a long, long time - and getting worse.

I'm not sure how many innings this baseball game will have, but I'm pretty confident, unfortunately, that were no where near the end, let alone the extra innings that would entail a fierce and wicked storm that I believe is about to set upon us.
 
Quote from ByLoSellHi:

Excellent issue, excellent analysis...thanks, makloda.

Watching the U.S. consumer and business pull in their horns and stash their cash in such a stingy manner, while the fed pumps mass amounts of liquidity into the financial system - it reminds me of the old adage about an unstoppable force running into an unmovable object.

I think deflation wins out at the end of the day as the psychological devastation of mass job losses, home value declines, 401(k)/IRA/Pension Fund losses, etc. is greater than it's been in a long, long time - and getting worse.

I'm not sure how many innings this baseball game will have, but I'm pretty confident, unfortunately, that were no where near the end, let alone the extra innings that would entail a fierce and wicked storm that I believe is about to set upon us.
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I tend to agree. I think it's at least 12-18 months before there is ANY signs of stability in the job market.

I am hearing and seeing things that I've never experienced in my lifetime (I'm 34). People are terrified right now and I'm starting to see frugality is coming back en vogue. No longer will people be impressed by the luxury car that their neighbors leased or how big their buddy's house is (110% financed).

This will spell big trouble for growth going forward and even when it starts to turn, it could be decades before we see 3-4% GDP growth like we were used to.
 
Growth is subjective. GDP has been growing for the last 5 years because debt-induced consumption has exploded. We've been avoiding a slow-down in a US based world for almost a decade because of our friends at the Banks.
 

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Quote from clacy:
Even though Barack would likely love to increase taxes, I believe that he won't be able to pass radical tax hikes due to a poor economy and the fact that he and the rest of the Dems will be voted out in 2010/2012 if that happens. In his second term, that is a much greater possibility.
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I wouldn’t be so sure about that. Didn’t Clinton raise taxes right away? He got reelected by a landslide, and until Hilary ran, he was the savior of the Democrats and presumably the country.
 
i don't think they are start saving right away.. right now imo,they spend less and pulling out money from stocks and other risky investments and putting them into bank accounts..
 
Quote from Bob111:

i don't think they are start saving right away.. right now imo,they spend less and pulling out money from stocks and other risky investments and putting them into bank accounts..
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That's a very good point. I wonder if the bean counters considered the outflows of the market are being deposited in the bank and now called "savings".

Also it wouldn't surprise me if people drew cash on their credit lines and put the cash in the bank. Seriously, credit is worthless right now and could be shut off or limited, and may not be available in the near future. people lose their jobs and default on their credit and use the cash in the bank for living expenses. These are desperate times.
 
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