Amid Economic Good Times, A Warning Sign Emerges

Investing.com – Stock prices are rising, unemployment is falling and consumers are feeling confident about the economy.
If that sounds like too much of a good thing, some economists say you may be right.
Behind that picture of a solid U.S. economy is a warning sign: a falling national savings rate.
The savings rate has been on the decline for the past two years and recently hit a 12-year low of 2.4%.
Economists say that when consumers are feeling optimistic about the economy, they tend to save less and spend more.
They also tend to borrow more, which has pushed credit card debt back to a record high.
It’s a worrisome combination.
With consumer spending 70% of all U.S. economic activity, any pick-up in savings will hurt spending, slowing overall growth.
The falling savings rate also means consumers have a smaller cushion to fall back on when the economy sputters.
The U.S. has long had one of the lowest savings rates among developed countries.

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