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Pastimes : The Big Picture - Economics and Investing -- Ignore unavailable to you. Want to Upgrade?

To: Arik T.G. who wrote (595)	11/30/1998 6:22:00 AM
From: Arik T.G.	Read Replies (1) \| Respond to of 686

From Cents magazine: lp-llc.com <quote> Unlike past dip-buying bonanzas, there's good reason to worry about this immaculate reconception in the stock market. The reason: An increasingly wealth-dependent American consumer is now hooked on asset appreciation as never before. This shows up in the form of a personal saving rate that has now moved into negative territory (-0.2% in September) for the first time since the early 1930s. I am not sympathetic to those who want to discredit this measure in order to dismiss this new and important tension point in the US economy. No, this is not the perfect gauge of household saving. But it does reflect an accurate assessment of the balance between the income generated by current production and the personal spending that drives that same pace of real activity. As seen in this context, a negative saving rate suggests that spending growth remains well ahead of measured income growth; the related inference is that US households are now more than willing to let the stock market provide the saving that would normally be forthcoming from a more cautious alignment between consumption and income. All this leads to a potentially lethal double-bubble -- an ever-expanding equity bubble that has given rise to an equally ominous spending bubble. <end quote> ATG