New Threat To Economy - Americans Saving Like It's The '80's

[sfstaxprep]

Americans are slashing their spending, hoarding cash and shrinking their credit card debt as they fear their jobs could disappear during the coronavirus pandemic.

US credit card debt suddenly reversed course in March and fell by the largest percentage in more than 30 years. At the same time, savings rates climbed to levels unseen since Ronald Reagan was in the White House.

The dramatic shifts in consumer behavior reflect the unprecedented turmoil in the US economy caused by the pandemic. Although caution is a logical response to that uncertainty, hunkering down also poses a risk to the recovery in an economy dominated by consumer spending. A so-called V-shaped recovery can't happen if consumers are sitting on the sidelines.

https://www.cnn.com/2020/05/12/investing/jobs-coronavirus-consumer-spending-debt/index.html

[Iliyah]

1. Yep . .

smart move.

[Auggie]

2. Headline is suspect IMO. WEALTHY Americans are saving ...

upper middle income and those just under the 5%.

The middle class and poor are going deeper into debt. Of course they can’t save — they haven’t disposable income with which to do so.

[Wounded Bear]

3. Guilty as charged...

much of my stim check went to pay down credit cards. A significant slice of it is still in my savings account.

Spending is not much different in that I'm basically buying food and critical supplies and not much else.

[smirkymonkey]

14. Same here.

I made some political donations, paid down some credit cards and left the rest in savings. I am also only buying food and supplies. No extras.

Well, I rent the occasional movie on Amazon, but that's not much.

I just don't feel secure enough to be spending right now.

[Wounded Bear]

16. I spent a little bit on "me" purchases, but not much...

yeah, no huge expenses just yet.

[SunSeeker]

4. Everyone knows they're on their own while Trump is President. nt

[WhiskeyGrinder]

5. And in six months, a year, we'll get another tsking story about how people are spending too much

and aren't saving.

[safeinOhio]

6. Most of my friends are retired on fixed income.

Most are doing the best in years. Not spending $ on going out and vacations. Most say they are spending $300 to $600 less every month.

[mokawanis]

7. I'm spending a lot less

and banking every penny I can. I think we're in for a very rough year, and beyond that? I don't even want to think about it right now.

[Renew Deal]

8. Are people saving or do they have nowhere to spend it?

I don't think there is a lot of recreational spending right now.

[Yavin4]

10. +100

Going out to eat, haircuts, salons, gas, movies, etc., there are fewer places to spend.

[Cha]

18. Summer vacations.. new clothes..

[elias7]

9. V shaped recovery? As if the worst of this is behind us...

[democrattotheend]

11. I definitely am

Who knows what the future brings, and why go out of my way to stimulate the economy in an election year with a president I can't stand?

I understand that I'm fortunate to be able to save, and so despite wanting to save as much as I can, I've also been giving some away, to charity and a bit to Biden's campaign. I had originally budgeted about $1,000 for political donations this season, but now I'm torn between that and wanting to give to food banks and charities that help people out of work, especially undocumented immigrants who are ineligible for government relief. I'll probably end up upping my total contribution and doing a little of both.

[roamer65]

12. Negative interest rates will end the savings binge.

Once they are implemented, physical cash withdrawals will be highly restricted or prohibited. This will stop bank runs.

They are going to force people to spend the money. What do you do when you are losing money on a bank account and can’t get physical cash? You spend it.

[Bucky]

13. Why we need an ongoing stimulus

You got to water the roots of the economy. We need New Deal style make-work projects: roads, bridges, schools, public art projects, farmers' markets, home repair programs... Anything that can get people working and spending.

Scatter siting cottage industries like mask & PPE production would be perfect. Hundreds of people are doing this at home already. We should be doing in the thousands though

[Hekate]

15. The poor cannot save, & every dollar of their stimulus will go straight back into the economy...

...for food and rent and the credit cards they used to buy groceries for the kids.

[ProfessorGAC]

17. I'm Suspicious

Can't go to restaurants.
Tech stores closed.
Nonessential stores closed.
No vacations.
Gas prices plunged.
No $40 haircuts or manicures.
No $300 tattoos.
I'm doubting there is a behavioral change among consumers.
There's just nowhere to spend the discretionary dollars.

[JI7]

19. huh ? Everything is closed , what are they supposed to spend on ? Why not pay down credit card debt

?