In an E-mail, liberal economist Dean Baker of the Center for Economic and Policy Research notes that if Americans push their savings rate from the current 1.3 percent to the post-WWII average of 8 percent, it would imply a fall in annual consumption spending of roughly $700 billion.
It just so happens that makes for a nice compromise number for a possible 2009 stimulus package from the Obamacrats. (I have bean hearing numbers from $500 billion to $1 trillion.) Of course, Americans won't feel as impelled to save if we get a nice rebound in net worth from a new bull market in stocks, but that might not happen if we get higher investment taxes and the elimination of tax breaks for retirement plans. Hmmmm ....
Reader Comments Read all comments (2)
Ray Fisher of NM 3:50AM November 02, 2008
Jackilyn Pyzocha of MA 6:00PM October 31, 2008