One of the best measures of a successful economy is a high rate of savings: personal, household, and business. With respect to these measures, the United States is unsuccessful.
Let’s look at the personal savings rate in the USA. It is falling. It is now in the 4% rage: 4% of disposable income.
You can see the decline over the past 50 years. Americans were once reasonably thrifty. In the Ford recession, they became positively fanatical. But this did not last long.
You can see the pattern: the peak rates are falling. This points to an increase in present-orientation. It reveals an attitude: “eat, drink, and be merry, for tomorrow we die.”
This attitude has increased alongside Medicare and Social Security. As these two IOU programs move into the red — unsustainable — Americans save less.
This points to a grim reality: the destruction of most Americans’ retirement plans.
How about you? How are you doing? You had better be saving at least three times what the average Joe is. And you had better be saving in markets that are unlikely to do as poorly as the U.S. stock market has done since 2000: down 40% if you count inflation.