Report: Americans Saving More
The Washington Post reports:
The recession that just rocked the U.S. economy happened in part because Americans were borrowing and spending more than they could afford. Now, three years after the downturn began, American families are moving faster than many analysts had expected to put their finances in order by paying down debts and boosting their savings.
That bodes well for the recovery. Once Americans get their savings to a comfortable level, they can ramp up their spending all over again - but this time without necessarily going into hock - and give the economy a badly needed lift.
Compared with the summer of 2008, when consumer debt peaked, there is now 7 percent less mortgage debt, 12 percent less in auto loans, and 15 percent less credit card debt outstanding, according to the Federal Reserve Bank of New York. Loan payments last year were at their lowest level in a decade.
Meanwhile, Americans are saving at nearly triple the rate they did between 2007 and 2009, setting aside 5.3 percent of their disposable income in December, according to the Commerce Department.
It's not just that Americans are becoming more frugal. Indebtedness is down in part because banks are less inclined to extend loans and have written off billions of dollars in loans that went bad.
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