America remains a nation of savers and not spenders. The trend bodes poorly for a full-fledged economic recovery — if, as economists say, consumer spending is two-thirds of gross domestic product.
A new Gallup poll on saving and spending shows:
Americans continue to say they enjoy saving money more than spending it, by 60% to 37%. These self-perceptions have remained stable in recent years, but across four measures from 2001 to 2008, the gap between the saving and spending options was smaller, including in 2001, when 48% preferred saving and 45% spending.
This decade-old trend may confirm that Americans are caught in a period in which real wages have not risen for most people but have fallen. Alternatively, the two trends are not directly related, but together demonstrate that consumer spending should not be expected to recover in the near term, or perhaps longer.
Self-reported activity can often be distorted. Gallup points out that Americans may want to save more and, therefore, say they enjoy saving. But the root of the problem is more complex than that.
No one could argue that, as wealth transfers to the rich and away from the middle class, the effects make it more difficult for the middle class to improve its economic future in the present or the future. It is likely to be more difficult for the middle class to save for retirement or have money set aside for large, unexpected costs such as medical emergencies. Many surveys of the middle class show that a large number of them have no savings at all and no access to money if it is badly needed. Home price attrition has only added to this desperate state of affairs.
People with little or no money today may have been spenders when home equity values were high. Obviously, that asset’s value has dropped precipitously in most cases. The insult of losing this greatest “savings” pool almost certainly has changed the views of those in the middle class toward their own finances. In turn, consumer spending cannot recover much, because whether or not Americans think they save, they have little money to actually save — and nearly none to spend.