Wednesday, April 27, 2016

Why Do Americans Spend Instead of Save?

In The Atlantic author Neal Gabler riffs on the finding that almost half of all Americans (Gabler included!) would be hard pressed to come up with $400 in an emergency.

Lack of growth in median incomes in recent decades gets blamed for the American lack of saving. In a public radio interview, however, Gabler pointed out that residents of other nations have experienced similar stagnation without drastically reducing their savings rates. Americans seem to be born spenders.

Greater income inequality may be exacerbating the tendency. Knowing we haven't a prayer of keeping up with the billionaires, we try harder to keep up with the Joneses. Renewed growth in household incomes is unlikely to help. Parkinson's law remains firmly in place: Expenditures rise to meet income. 

According to a recent Gallup survey, most Americans say they prefer saving to spending. They're not exactly lying. They really do intend to save their tax refund. If only that 85" LED 2160p Smart 3D 4K Ultra HD TV hadn't gone on sale….

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