Zero percent savings rate.... Never since 9/11 or the Great Depression..... http://www.marketwatch.com/news/sto...89F-441B-BA3B-4CFDC93DD312}&siteid=mktw&dist=
The "savings rate" has become a flawed, meaningless statistic. http://www.nationalreview.com/nrof_comment/tamny200412230932.asp
That article is bullshit.. When banks calculate mortgage qualifications they use similar metrics the gov. uses.. they dont qualify based on how much you save on taxes paying your mortgage... lol The only validity is the 401k savings which is not factored in.. but in reality this not disposable and going to be used to purchase cars or clothes... the important thing is consumer liquidity on a real basis. Meaning if I make $5k a month... and spend $5k a month which factors my mortgage, car payment, etc .. I have 0 savings.. eventhough I might have $50k in a 401k.. that is irrelevant. because when I got to best buy or Walmart.. that $50k is dead money. The fact that the savings rate is 0% just goes to show you that the US consumer is high leveraged out, as is the economy and housing market.
Excellent Commentary Surely there is a way to construct this number more accurately in that it would become more useful..... Any one person can have an individual depression if they are unemployed with little money.... at the same time the economy appears to be doing well.....and vice versa... The micro levels matter....macro levels paint everything with a brush...and in this case inaccurately describe savings... Need to get some new blood in the ole´timers fed stat dept...
Which part of the article made you feel better about the overall situation? That the number of high net worth individuals (people with financial assets of at least US$1million, excluding home real estate) climbed by 14% in 2003 or that the number of people investing in the stock market has more than doubled since 1980, or something else I might have missed?
Zero Savings Rate is a function of the highly leveraged housing market, since housing costs are the major cost in everyone's budget. Being in Real Estate here in NY (Long Island), I can honestly say to "watch out below". Things are way overpriced, people are mortgaged to the hilt, and rates are eventually going up. This can lead to only one thing: Housing Bust, foreclosures, and a continuation of record low Savings rates. Hold onto your hat !
I agree, same is true here in Boston. We are renting a property that was on the market for $3.2 million for $6K a month! Things are way out of whack. Just read that in boston prices in 89 fell an average of 80% after several years of 25% annual increases. Kind of puts the lie to those who think that prices can never come down by much.
That's interesting. Give us some examples, demographically in terms of age, professional class, income ranges, and mortgage amounts and debt service. For example, a two income family with two kids in school, earning 120,000 per year. What is thier likely house value and borrowing costs? Throw in so me other examples A person earning 480,000 per year with 500,000 in liquid assetts could qualify to buy what kind of property?
I know the couple personally, $115-20K, two kids in private bought 780K -property in DC in 2004 with 5% down(15/80 mort) and 5/1 arm. Now they can not afford to do anything except pay their fixed costs amd are stressed because if it. They got caught short on taxes and had to put it on CC (works for WB so no withholding).
I'm salaried at 115-120k, no kids, no wife, and no car payment, but there is no rational way I would ever buy a house over 350k even in my situation. Add in some kids and a wife and I'd be looking at a 200k home. These people are idiots. I grow more and more scared with every passing day. Got gold?