An investment newsletter I get periodically mentions this issue, then points out that the savings numbers do not include stocks, bonds, mutual funds, or real estate. (Which makes sense to me, since those items fluctuate in value -- if everyone tried to sell at once, the values would plummet; hard cash doesn't have that issue.)

Now, most lower-income persons won't have much in the way of those items, aside from a house perhaps, so maybe it shouldn't make much difference. However, those spending numbers would also include the higher-income folks, wouldn't it? People who would have well-above-average expenditures, but whose savings would not show up in this measure.

What we really need is to see the savings ratio for different income brackets, and probably ignore the numbers for incomes above $100k, due to the above problem.

- Doug

I have a friend who's convinced that American's willingness to turn a blind eye to the federal deficit is directly related to their willingness to live on credit in their own life.

I would like to see an answer to Dave's assertion, above; I would have to opine that if the vast majority of investments are not included in the savings rate, then the number is so fundamentally meaningless as to be outright deceptive.

While I find the spending exceeding income numbers alarming, although possibly fueled by ready home equity, I find the savings rate next to worthless because of what it does not include.

I don't know the details on how debt/savings are calculated, I have to admit. I'll look into it.

I think anyway you calculate it though, when consumption is rising faster than income there's a long term problem. As least that's how it's always worked out for me!

Well I, for one, am totally broke. On the other hand, I'm really starting to save electricity -- I turn my PC off when I'm not using it! Maybe all of America will get so poor it'll help with global warming.

One aspect of this that's particularly galling is that the current administration's cavalier attitude towards the deficit (fueled by a tax-cut religion) actually works to create a disincentive for relatively sane Americans to save. Because, you know, sooner or later there will be a reckoning, and the reckoning will almost certainly involve some sort of devaluation of the dollar. So the money a thrifty person socks away money today -- and at such low interest rates! -- is going to erode in value...

the fact that Americans appear congenitally unable to spend less than they earn is a vice whose genesis is right here at home

Andrew, don't buy the bunk that all of this money is spent on overpriced cappucinos and unnecessary SUV's.

Take a look at the basics. The gas pump. Healthcare costs. Real estate prices. Food. Etc.

Is it any coincidence that savings go negative when Exxon reports historically unprecedented profits? When HMO CEO's pay themselves $100 million per year and up fees 20% annually? When natural gas and home heating costs soar? When seniors are forced into a medicare plan that enriches drug companies? When the gov. failes to protect a major city from a major and expected disaster? When local and state gov. must raise taxes b/c the federal government cut off it's own feet to spare the rich? When credit card co's get away with usurious interest and fees?

Americans are being robbed by a corporate oligarchy that does not cover its own costs. That element would like nothing more than to laugh all the way to the bank, stick us with the bill, and call us stupid.

You ought to look deeper at the issues here before getting on this particular soapbox again. It's too easy for the rich to blame the poor for their predicaments, and pocket the earnings from their energy stocks.

The idea that folks like me, with towering credit card debt and no savings, are somehow living profligate lives is patently false. Towering debt these days is a direct result of our greed-driven capitalist market. Don't believe it? Take a gander at Exxon's astounding quarterly profits, some of which came out of my pocket. Our current level of corporate greed makes it impossible for folks like me to pay just my routine living expenses.

Take a look at my pitiful example. I have monumental credit card debt. How did this happen? My ex-husband and I were both unemployed for six months before he enrolled in graduate school just to be assured of a better future. I was unable to support the family completely on my secretarial salary, so we fell behind after spending all our savings first. In the years since then, we never recovered. Now, as a single parent (my husband took that 'better future' with him), nearly every penny of my monthly salary is spent on utilities, fuel (to get the kids to school and me to work), mortgage, and endless insurance policies -- life insurance, health insurance, mortgage/household insurance, car insurance. At my income level, I can't really afford insurance, but the costs of not carrying it would be devastating should a catastrophe occur. So, I maintain these policies. It should also be noted, however, that because I'm in debt (and considered a poor risk), the costs of my insurance plans are higher, so I end up spending over one-third of my monthly income on this intangible. An intangible item, the greatest portion of which my parents never had to pay for (i.e., health insurance).

My current 'savings' account (which amounts to one-half of an average month's expenses) earns 1.2 percent interest even as the same bank passes along my credit card charges at 15 percent interest. My credit card balances increase every year because they help me cover the many unexpected family expenses I cannot pay cash for. Two months ago, I charged my daughter's $800 dental bill; three months before that, I charged the $300 plumbing repair; six months prior to that, I charged $2000 to have two trees cut down on my property (forced by the city government). Then there was the new roof. The new tires. All of these were expenses I had no choice but to pay, whether I could afford them or not.

I'd love someone to show me a miraculous way to set aside some savings without my children going hungry. For now, as this greed-driven corporate society increases the 'simple' costs of life at astronomical speeds, it just isn't possible for me. And I hate to think of the upcoming college expenses for my kids, as the Repugs keep trying to eliminate all student grant programs with their insidious legislation. I still need to feed my kids and heat the house in winter, so I will continue to pedal as fast as I can and borrow from Visa to pay Paul, hoping to Goddess that I drop dead the day after I retire.