Savings rate:
U.S. household debt, which has been growing steadily since the Federal Reserve began tracking it in 1952, declined for the first time in the third quarter of 2008. In the same quarter, U.S. consumer spending growth declined for the first time in 17 years. That has resulted in a rise in the personal saving rate, which the government calculates as the difference between earnings and expenditures. In recent years, as Americans spent more than they earned, the personal saving rate dipped below zero. Economists now expect the rate to rebound to 3% to 5%, or even higher, in 2009...
The annual personal saving rate...averaged around 10% during the early 1980s, when the economy was in a severe double-dip recession. It then began to fall steadily, even as the economy weathered two more recessions, averaging about 7% around the time of the 1990-91 recession, then falling below 2% for the first time in 2001. It averaged about 0.6% from 2004-07. (The only time the annual saving rate went negative was in 1932 and 1933, rates of -0.9% and -1.5% respectively.)
blogs.wsj.com
my comment: I expect a savings rate of 5% or more, and continuing declines in real wages, for the next several years. That implies no quick or big rebound in consumer spending. If the government prints enough dollars to cause a sharp rebound in consumer spending, the result will be 5-10% inflation.
disclosure: I'm still slowly selling this rally. Sold more KLIC today at $2.17-2.20. The sharper and quicker this rally is, the more I'm convinced it's a bear market rally. If ASML hits 21, and AMAT hits 14, I'll have sold enough to be off margin. |
