According to the latest Bureau of Economic Analysis report, consumer saving as a percentage of their disposable income increased to 3.6% percent for the month of Dec 2008. For a country whose consumers have been living way beyond their means, this is a good sign.
But what may be good for a consumer may be bad for the economy. More consumer savings means less money spent on buying stuff like cars, TV and other discretionary items. When consumer spending represents 70% of the economic activity, any slowdown in spending will adversely affect the economy as a whole.
This slide show aptly captures the debate.
Links obtained from Planet Money Blog, your source for all things economics and finance.
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