US consumers raid their savings accounts
US Consumers depleted their savings to finance the purchases of cars and other big-ticket items.
The Commerce Department reported yesterday that the savings rate fell into negative territory at minus 0.5 per cent, signalling that Americans spent all of their after-tax income last year but also dipped into previous savings or increase borrowing.
Analysts have warned that this behavior was “risky” at a time when 78 million Americans are on the verge of retirement.
“Americans seem to have the feeling that it is wimpish to save,” said David Wyss, chief economist at Standard & Poor’s in New York. “The idea is to put away money for old age and we are just not doing that.”
The Commerce report said that consumer spending for December rose by 0.9 percent, more than double the 0.4 percent increase in incomes last month.
