Walden: Spending and Saving

Mary:  This is Mary Walden with economist MW, welcoming you to the economic perspective.  Today’s program looks at spending and saving.  Mike, many economists – including you – said that the recovery from the Great Recession was going to be slow.  You thought that consumers were so battered by the downturn that they would hunker down, become tightwads, and squirrel away money in savings.  Did this happen, but are we now seeing some changes?

Mike:  Summary Answer

1. certainly did happen – spending, especially on big-ticket items, grew at a snail’s

pace after the recession, while the personal savings rate grew from 2% to over

10%

1. but as the economy has continued to grow, and the job market has improved,

consumers have become more confident

1. in the last few years, spending on big-ticket items rebounded, but the savings

rate has dropped

1. result – borrowing has increased
2. this isn’t sustainable – will have to see better income growth for spending to

continue

1. I’m MW

Mary:  And I’m Mary Walden for N C State Extension