Saturday, June 27, 2009

Savings Rate at 15-year high


The savings rate in the U.S. has jumped to a 15-year high.

Due in part to the stimulus package and the increase of incomes jumped 1.4 percent, the biggest gain in a year and easily outpacing the 0.3 percent increase that economists expected.

The savings rate, which was hovering near zero in early 2008, surged to 6.9 percent, the highest level since December 1993.

"Personal tax cuts and government income support have brought consumers back from the dead, but the recuperation period promises to be a long one," said Sal Guatieri, an economist at BMO Capital Markets.

Some financial analysts think this savings rate increase will cause a slow down of the economy due to lack of spending.

This savings rate increase will probably take a couple of weeks before banks implement the actual change for their customers.

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