Screw the economy. I'm done spending. I'm out of credit card debt, and in a few years my car will be paid off. I've been building up my savings for the past year, and doing pretty well right now (despite being unemployed).

My next purchase will be a house...after I find a new job of course.

Caution : Painful truth in the following paragraph.

I hate it if you are losing your job in this downturn ,but the fact is that a lot of the economy that has melted down was based on the fiction that we could borrow money from the Chinese ,Japanese or whomever ,spend ourselves dizzy and call that "wealth". Lots of Americans have conned themselves that they are "saving" by making payments on a lot of rapidly decaying consumer crap that they quickly grew bored with.This has put us in hock to what amounts to a money cartel (the top 5 credit card companies issue 87% of all cards) that now has a claim on the next 20 years or so of a large chunk of our disposable income. This is the same money cartel that is "too big to fail" and has a lip lock on the taxpayer teat for however long it takes to get back the money that they gambled away on hocus pocus derivatives and rotten mortgages.

The fun is over. Time to start paying it all back.

It's perfectly fine for the economy, in the definition of economy as, "aggregate quality of life of the citizenry." Not so good for the banksters.

I suspect that a lot of the so-called improvement in consumer credit stems from writeoffs. This is also good for the economy, but not at all good for banks.

Damn all of you savers! Go buy a new iPod! You need a new pool! How about those kitchen cabinets? They look like crap! Isn't your house a little small to keep all of your stuff? Go buy a new one!

So they agree that this isn't bad. We don't need short term solutions, we need long term solutions! Sounds like Americans are on the right track, if only the white house could follow our example.

Well clearly the 'economy' wasn't there for consumers, so I say fuck the economy. Save and be prudent, and to hell with the financial people who lived off of our consumerism then bailed with golden parachutes when times got tough.

Long-term, the trend "puts (consumers) in a healthier financial position" by trimming interest costs and encouraging investments for "future needs like college education and retirement," says John Ryding, chief economist of RDQ Economics.

Yeah, well, let's wait to see if the money burns a hole through our pockets.

The Paradox of thrift

[en.wikipedia.org]

@dbshaw: Your not getting me a job then are you? Spend a little PLEASE.

Hey, people need to get their individual shit together before we can have an actual sound economy going forward. I'm tired about hearing crap like the economy blows because I'm being responsible and saving my money. If the economy wasn't built on rampant consumerism and profiteering it wouldn't be in the shitstorm that it is now.

Damn the bad luck, we are hurting China, Inc. Did ya ever think if you are trying to make the house nut, food, fuel to get to work, there might not be a big chunk of cash to power WalMart/China and BOA/Chase, et al? Oh, damn, we are not spending, the terrorists are winning? Not. They ain't got credit either.

@frank64: No, I think its time americans went back to planning for their own welfare by saving their money wisely.

Darn right people are saving their money.. At my work we only do savings accounts and loans, and our savings are up $600,000+ since last August.. It's hard on our credit union.. but it's good that our members are saving their money for... well.. whatever they're saving for.

Our loans were down for a long time.. but they're slowly coming back up now that our members aren't so paranoid about losing their jobs.

I see it is a positive thing.

I think this is a real wakeup call that our economy wasn't what we thought it was. Rather it was a house of cards that could tumble at the slightest breeze.

With people spending money they HAVE rather than money they DON'T HAVE. We end up with a stronger economy in the long-run. Mainly because a few rumblings of failure won't cause a catastrophic collapse.

hmmmm. I'm guessing that doesn't factor in the debt per capita the government assumed on our behalf during that period.

Although without CC debt (knock Amex all you want but they keep you honest) we took our savings for this year and paid down the mortgage rather than putting it into mutuals.

It felt Really Really good.

An economy that is based on ruinous levels of consumer spending, zero savings, and a housing bubble is not "healthy" regardless of what the stock market and "experts' say. That's like calling a crack whore healthy because she isn't fat.

The worse this recession is now, the better off this country will be in 3, 5, and 10+ years from now. And we'll remain better off having learned these hard lessons until our future generations stop listening to the stories about how bad things were in "aught nine" and the cycle repeats itself.

@Kimaroo - 20% More Kitty Added!:

but it's good that our members are saving their money for... well.. whatever they're saving for.

@supercereal: Well I don't know what they're saving it for because It's not my place to ask them.. If they tell me that's one thing.. but since I work there I don't go asking them, "So, whatcha saving this for?"

That said, I agree with you.. lol.

@frank64: My salary can't pay your salary. Sorry.

This is good news for sure. The sooner we get away from a consumption economy the better. We need to get back to a production and service economy and bring back the production jobs from China and the service jobs from India.

A good place to start would be to lower the capital gains tax to near zero and lower corporate tax rates since America has the 2nd highest corporate tax rate in the industrial world. In fact, if the government would get out of the way of individuals and small business, the economy would take off.

@Kimaroo - 20% More Kitty Added!:

but it's good that our members are saving their money for... well.. whatever they're saving for.

I'm hoping they're saving for retirement; I'd like to think that there might be something left after the boomers kick the bucket.

@liquidnumb: No love on these boards I guess! Is everyone Republican or something?

The money is just supposed to go from hand to hand, producing jobs(such as one for me) and taxes. Not sitting in a bank somewhere.

Yeah, when I get a job I will save, right now I am just asking for you to enjoy your money a little. Go out and have dinner!

@supercereal: The problem is people were not saving before. They were spending money they didn't have. Over saving has not been a problem. You shouldn't be one check away from financial breakdown and to many people are/were. I think they are better off saving getting a good cushion, and then they can relax and enjoy life a little stress free.

$50/wk x 2 working adults in household + FNBODirect Online Savings Account = Debt Payoff Savings Account :)

Wait - we paid off debt? Last I checked, it was the credit card companies eliminating our credit lines and preventing us from charging anything in the first place. Sure, we could have kept the balances on there, but who would want to keep doing business with those guys?

I've been wailing about this regularly for a year. How do we replace our "over-consuming" economy with another model that allows for recovery and growth?

Thrift = good. Eliminating jobs = BAAAAAD.

@jstonemo: Yes, we have the 2nd-highest Corporate Tax rate, but we don't have a VAT, which takes up the slack in most of the rest of the industrialized world. And there are enough loopholes in the corporate tax code to drive a truck through, so the EFFECTIVE corporate tax rate is far less.

And I'm not sure how removing the capital gains tax (especially given how making up the lost tax revenue would mean a higher income tax) would solve any problems.

Isn't that like 60 bucks a head? We cut our debt by $2/day? So, a slightly smaller latte? Big deal.

This is a sustainable economic model, so cheer up people. It is how countries(as well as individuals) grow wealth. We are all consumers, but most of our rampant consumerism benefits slave labor mills and offshore corporations, not US manufacturers and laborers.

I prefer developing a sustainable economic model that does not rely and boom and bust cycles, but slow, steady growth. But this is very hard to do with interference of private banking cartels like the Federal Reserve and their constant market manipulation.

@frank64: Money sitting in my CU is loaned out to people as well as local small businesses. It's not the same as me going out and buying stuff, of course, but it's not merely idle.

If something that's good for consumers is bad for the economy, there's something very, very wrong with our economic system.

There are approximately 265 million Americans. If Congress would just give each American $1,000 to spend, it would only cost $265 billion and we could get the economy rolling again.

[This is not a serious suggestion.]

@Kimaroo - 20% More Kitty Added!: They're saving to watch our dollar plummet sharply?

Since the start of the recession, stores have been increasing prices, even though cost of natural resources and wholesale items have gone down. This greed is whats stopping most shoppers from shopping. Doubling prices is not the best way to increase consumer spending, all it does is forces people to shop elsewhere and for the store to fire workers due to lack of customers.

Near my neighborhood are a few stores that are constantly changing due to bad business, they start off with high prices and continue to increase prices when not enough customers come in and eventually they go out of business when they loose all of the customers. The only store that has not closed down is a grocery store. Even though they charge more than twice as much for food people still shop there because there is a apartment building complex near by and most people there do not own cars so they cant easily go to the walmart 5 miles away. the store takes advantage of their lack of mobility by selling food nearing expiration and a much higher cost. My family only shops there when we need something quickly and cant go to another store but other than that, it is walmart and costco (which ever is selling the goods at a lower price per gram)

tldr: Consumer spending is down because prices for goods in stores are too high.

I could give a crap. My stinkin' American Airlines Visa had a $6k limit and I was carrying a $3k balance. Naturally, they cut my balance to 3k several months ago. I paid that sucker off and am never using it again.

I know what they did isn't personal, but I'm glad they're not getting my interest payments anymore. Let them rot.

I'm about to pay off a bigger balance on another card and am interested to see if they slash my credit line on that one too.

At least some part of the recession must be blamed on the stupid tactics of the credit card companies.

The house always wins? Leave the house.

@frank64: I am a Fiscal Conservative.

Sorry, I wish I could spend some of the 45% the government took from my paycheck.

@supercereal: Well people have savings for a reason, usually for the unexpected. And it's not just as stupid as being wasteful with one's money. Being wasteful is (for example) buying a new car when you have the money, but will be broke after the fact. If you save your money, the come time when something happens (ie: you get laid off of work) then at least you'll have your savings to hold you until you get a job. But according to you that would be as wasteful as splurging on stuff.

This is exactly what the government needs to do.

Cut spending and pay down the debt.

Runaway inflation is coming, you savers!

You know what... if your business profits obscenely when a large amount of consumers act irresponsibly, good for you. Seriously.

When you start to make that status quo in your estimates and normal expectations, however, I lose all sympathy.

Our economy and country would be much better off if every purchase was viewed as a mortal combat between the wish to buy and the wish to squirrel the cost away.

@Trencher93:

"Runaway inflation is coming"

Agreed. When capacity utilization hits 83-85 % ( At about 68% now),you will see the inflation rate take off. Thats when the Fed has to do what it was unwilling to do from 1988 to 2008- raise rates to cool off an overheating economy.It will be painful at first (medicine almost never tastes good) , but it will be critical if we are to avoid the consequences of all of this Harry Potter monetary policy.

We'll see. Meanwhile ,accumulate REAL assets that will hold their value during an inflationary spiral.

I wonder how much of this is paydowns that were forced on consumers due to credit lines being cut and other "measures" the banks had taken to cut their risk.

@Snowblind: I find that hard to believe. (the 45% thing, not that you're a fiscal conservative)

I actually think this will end up being good for spending in the long run. Once people pay down a significant portion of their high interest credit card debt they will be able to buy things responsibly. Think about it. Unless your credit card rate was under 5%, if people go to no credit card debt they can spend more while saving at the same time. This will just mean slower growth over the next few years while a good portion of people lower their debt.

@The Marionette: No, you obviously didn't grasp what I said. I never said saving is bad, and I strongly encourage it. My general idea was that blindly saving with no intent to spend is the stupid part. Retirement, rainy-day funds, and specific item funds are all worth saving for because you will use them if/when you need them. Putting away more than you can ever possibly use (Yes, you can oversave for retirement. No, you don't need $500,000 in your "job loss/emergency" fund) is absolutely just as wasteful.

@H3ion: several tens of millions of Americans are wondering what you have done with them...

It seems nonsensical to me that our economy is so dependent on consumers spending money in such ridiculous manners that they have to live off debt. Was our system always like this? It seems like being intelligent about expenses would be good for everyone. Maybe it will force manufacturers to produce high quality products that will last rather than cheap-ass pieces of crap that have to be replaced every few years?

@dbshaw:

I concur. I'm going to be paying off a lot of debt over the next 5 years, and trying to spend much much less. I am tired of being beholden to credit lenders like some serf bowing down to a lord that may grant me a parcel of land if I am in his service long enough.