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As
Savings Begin To Fall
As more and more people are becoming dependent on credit
cards and borrowing, saving accounts have not fallen back. The
Credit Union National Association (CUNA) collected statistics
that showed that from January to August of 2006, the rise was
1.8%. In comparison at the same time in 2005, savings rose to
2.5%.
There has also been a shift in credit unions from savings to
certificates of deposit. People have been taking advantage of
certificates of deposit since the Federal Reserve has raised
it's short term interest rate to 5.25%. The Commerce
Department has shown that after tax income minus all expenses
leave the savings rate in the negative territory since the
spring of 2005.
One of the major factors for this fall out is the rise in
housing costs. With the rise in equity people find less reason
to save and more reason to borrow. Statistics show that within
the households across the nation the savings rate was at
negative 1% in the first quarter of 2006. For those who were
extracting from their equity the rate was negative 15%. The
big issue here is that savings must increase so that the
economy is prepared for the retirement of the baby boom
generation. If this fails to happen there is going to be a
real problem that we may never be able to repair. Most baby
boomer's have already come to terms with the fact that they
are going to have to work a lot longer than they had hoped.
