5 ms·

How am I supposed to interpret this? That we're currently at the same point we were just before the 2008 GFC? Because that's how I read it, and I hope it isn't

How am I supposed to interpret this? That we're currently at the same point we were just before the 2008 GFC? Because that's how I read it, and I hope it isn't a rhyme.

nine_zeros 3y ago
The interpretation is that people are not saving enough. Which means personal debt is expected to rise, consumption is about to slow down, and corporations will likely see lower revenue growth that they have been used to in the past few years.
codeTired 3y ago
I think covid made it weird. People were hyper saving and it caused demand to build up. Then people were “fuck it” after things started to return back to normal. However, people will eventually have less money to spend.
- chii 3y ago
  > People were hyper saving i think instead of thinking of it as saving, it's more "unable to spend". Now that they are able to spend again, they do. There was never an intentional savings spree imho.
  - rsynnott 3y ago
    It's not just "unable to spend"; public anxiety tends to cause people to put off spending.
thatfrenchguy 3y ago
That Americans on average have been horrible savers for a generation or two?
- adventured 3y ago
  On average Americans have gotten dramatically richer over the past generation or two. The average American is doing far better financially than the average German or Swede. The median is the relatively ugly picture. The average American has invested a lot in housing and equities, both of which have soared over the past 20-30 years. The average wealth per adult in the US is ~$550,000. That's just behind Luxembourg for #2 in the world (led by Switzerland at $685,000). That's a shocking average figure for a nation with 250+ million adults. It's closing in on double that of Sweden, and it's 2/3 higher than the UK or France. It's well over double that of Germany. It's also far higher than very affluent Norway. The US Gini figure is also lower than Sweden now (Sweden has become one of the most unbalanced affluent societies due to their horribly failed immigration integration over the past decade or so). If you're American, you definitely want to be average (or above), not median. How about the median wealth per adult? ~$107,000 for the US. That's above Austria, Germany, Sweden, Finland, Japan, Singapore, Spain, Italy. And it's below the Netherlands, France, Canada, Norway, UK, etc. Germany's median wealth per adult is a mere $66,000. They should be asking some serious questions. Greece is at $53,000 and Portugal is at $70,000 for refence. The UK is up at $151,000, with France and Canada around the $135,000 area.
  - probablynish 3y ago
    Median net household wealth increase far more than mean net household wealth in the 2019-2022 period: https://www.federalreserve.gov/publications/files/scf23.pdf https://www.federalreserve.gov/publications/files/scf23.pdf Mean: about +22% Median: about +35% Median within the poorest 25% of households: +900% (!)
  - chiefalchemist 3y ago
    Average is deceiving. A single billionaire and 999 with zero yields an average of one million each. With so much wealth at the too, average is going to be pulled up even when there are many with relatively near zero.
    - adventured 3y ago
      It's not deceiving, it's quite clear what it represents. Who isn't aware these days that the US is an unbalanced society in terms of wealth? I think even the typical person commenting on eg Reddit knows that story by now (which is why you'll find that - the gap between median and mean - pointed out in every single relevant thread on sites like that).
- latency-guy2 3y ago
  Putting money into a savings account that netted you on average 0.2% yield APR is a great example of a dumb fucking decision. Thank God Americans aren't dumb enough to let their money rot in an account that gives virtually no benefit.
  - thehappypm 3y ago
    FDIC insurance certainly has value; sure you're not getting much (or any) returns, but, it's just the extreme end of the risk/reward spectrum.
    - latency-guy2 3y ago
      If we were in an environment where the bank failure rate exceeded 1%, then I would say, sure, thats an OK investment, but that high of a BFR has not been seen. If we were then the investment landscape is much worse than FDIC could insure, rendering itself useless and in all likelihood would deplete itself within a few years (depending on which banks and how much capital gets hit of course). Then again, Americans have other options to park their assets that are far better places of retaining capital AND growth at the same time, housing being one, stocks being another, bonds being the third worst. So FDIC is about as good as BFR will ever lend you, and currently that means what I noted above - a dumb fucking decision.
      - thehappypm 3y ago
        Hmm, I’m not sure I agree. Everyone who had their money at SVB got it back thanks to FDIC insurance. Bank failures do happen, in the real world. Just because they’re currently rare doesn’t mean a black swan can’t happen
  - function_seven 3y ago
    The Personal Savings Rate on this graph includes money saved via investments. It's not just a Savings Account tracker. They take what people make, then subtract out money spent on goods, services, and taxes, and interest payments. The money left over is what is considered.
JumpCrisscross 3y ago
That the American consumer is stressed. See this comment from a quarter ago [1]. EDIT: Never mind. Personal savings are still stable [2]. Net savings included federal deficits. [1] https://news.ycombinator.com/item?id=37113568 https://news.ycombinator.com/item?id=37113568 [2] https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT
zyang 3y ago
Winter is coming.
DarkmSparks 3y ago
in fundamental terms, the savings rate needs to be higher than the depreciation rate or the net value of the economy decreases (hard and fast) negative savings rates are hard and brutal depression territory.

How am I supposed to interpret this? That we're currently at the same point we were just before the 2008 GFC? Because that's how I read it, and I hope it isn't a rhyme.

nine_zeros 3y ago

The interpretation is that people are not saving enough. Which means personal debt is expected to rise, consumption is about to slow down, and corporations will likely see lower revenue growth that they have been used to in the past few years.

codeTired 3y ago

I think covid made it weird. People were hyper saving and it caused demand to build up. Then people were “fuck it” after things started to return back to normal. However, people will eventually have less money to spend.

chii 3y ago
> People were hyper saving i think instead of thinking of it as saving, it's more "unable to spend". Now that they are able to spend again, they do. There was never an intentional savings spree imho.
- rsynnott 3y ago
  It's not just "unable to spend"; public anxiety tends to cause people to put off spending.

thatfrenchguy 3y ago

That Americans on average have been horrible savers for a generation or two?

adventured 3y ago
On average Americans have gotten dramatically richer over the past generation or two. The average American is doing far better financially than the average German or Swede. The median is the relatively ugly picture. The average American has invested a lot in housing and equities, both of which have soared over the past 20-30 years. The average wealth per adult in the US is ~$550,000. That's just behind Luxembourg for #2 in the world (led by Switzerland at $685,000). That's a shocking average figure for a nation with 250+ million adults. It's closing in on double that of Sweden, and it's 2/3 higher than the UK or France. It's well over double that of Germany. It's also far higher than very affluent Norway. The US Gini figure is also lower than Sweden now (Sweden has become one of the most unbalanced affluent societies due to their horribly failed immigration integration over the past decade or so). If you're American, you definitely want to be average (or above), not median. How about the median wealth per adult? ~$107,000 for the US. That's above Austria, Germany, Sweden, Finland, Japan, Singapore, Spain, Italy. And it's below the Netherlands, France, Canada, Norway, UK, etc. Germany's median wealth per adult is a mere $66,000. They should be asking some serious questions. Greece is at $53,000 and Portugal is at $70,000 for refence. The UK is up at $151,000, with France and Canada around the $135,000 area.
- probablynish 3y ago
  Median net household wealth increase far more than mean net household wealth in the 2019-2022 period: https://www.federalreserve.gov/publications/files/scf23.pdf https://www.federalreserve.gov/publications/files/scf23.pdf Mean: about +22% Median: about +35% Median within the poorest 25% of households: +900% (!)
- chiefalchemist 3y ago
  Average is deceiving. A single billionaire and 999 with zero yields an average of one million each. With so much wealth at the too, average is going to be pulled up even when there are many with relatively near zero.
  - adventured 3y ago
    It's not deceiving, it's quite clear what it represents. Who isn't aware these days that the US is an unbalanced society in terms of wealth? I think even the typical person commenting on eg Reddit knows that story by now (which is why you'll find that - the gap between median and mean - pointed out in every single relevant thread on sites like that).
latency-guy2 3y ago
Putting money into a savings account that netted you on average 0.2% yield APR is a great example of a dumb fucking decision. Thank God Americans aren't dumb enough to let their money rot in an account that gives virtually no benefit.
- thehappypm 3y ago
  FDIC insurance certainly has value; sure you're not getting much (or any) returns, but, it's just the extreme end of the risk/reward spectrum.
  - latency-guy2 3y ago
    If we were in an environment where the bank failure rate exceeded 1%, then I would say, sure, thats an OK investment, but that high of a BFR has not been seen. If we were then the investment landscape is much worse than FDIC could insure, rendering itself useless and in all likelihood would deplete itself within a few years (depending on which banks and how much capital gets hit of course). Then again, Americans have other options to park their assets that are far better places of retaining capital AND growth at the same time, housing being one, stocks being another, bonds being the third worst. So FDIC is about as good as BFR will ever lend you, and currently that means what I noted above - a dumb fucking decision.
    - thehappypm 3y ago
      Hmm, I’m not sure I agree. Everyone who had their money at SVB got it back thanks to FDIC insurance. Bank failures do happen, in the real world. Just because they’re currently rare doesn’t mean a black swan can’t happen
- function_seven 3y ago
  The Personal Savings Rate on this graph includes money saved via investments. It's not just a Savings Account tracker. They take what people make, then subtract out money spent on goods, services, and taxes, and interest payments. The money left over is what is considered.

JumpCrisscross 3y ago

That the American consumer is stressed. See this comment from a quarter ago [1]. EDIT: Never mind. Personal savings are still stable [2]. Net savings included federal deficits. [1] https://news.ycombinator.com/item?id=37113568 https://news.ycombinator.com/item?id=37113568 [2] https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT

zyang 3y ago

Winter is coming.

DarkmSparks 3y ago

in fundamental terms, the savings rate needs to be higher than the depreciation rate or the net value of the economy decreases (hard and fast) negative savings rates are hard and brutal depression territory.