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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: pater tenebrarum who wrote (128525)10/10/2001 4:47:21 PM
From: Mark Adams  Read Replies (2) of 436258
 
Part of the rise in savings rate is due to revision in some NIPA numbers. Another part may be due to smaller influence of capital gains tax decreasing NIPA income.

There was a fed study recently that clearly showed the savings rate for the bottom 40% had increased during the 90's, but was offset by the 'negative' savings rate of the top 25%. The top 25% are more likely to show capital gains excluded in NIPA savings calculations yet taxes on those gains reduce the official income.

I agree that some retrenchment may be taking place, as consumers are slowly getting it. That is what has the policy wonks worried- the change in psychology becomes a self fulfilling prophecy. But consumers have never been in as bad of shape as represented by some bears.

I also agree that deflation represents a risk, as born out by the commodities. In fact, I keep expecting the CRB to confirm light at the end of the recessionary tunnel, to no avail thus far. I expect it will take some time for the futures market to recognize there is hope the future may not be so dark after all. The CRB could reverse overnight if they do so. Until then, I'm reluctant to adopt a LTBH philosophy.

FWIW;

On the trade deficit;
Message 16411232

On corporate tax cuts;
Message 16473599
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