Start saving now

Please read this. Very interesting numbers coming out, indicative of inflation and potential recession. Pay down your debts, start saving at least 10% per check, cut up the credit cards:

The government reported last week that consumers last year spent all they earned and then some, pushing the personal savings rate into negative territory at minus 0.5 percent.

The savings rate has only been negative for a full year twice before, in 1932 and 1933, when Americans were struggling with huge job layoffs during the Great Depression.

The Fed report showed that the increase last year in credit card debt and other types of revolving credit was just 2.6 percent, the smallest in 23 years.

Analysts said some of that slowdown reflected that fact that Americans have stepped up borrowing through home equity loans rather than increasing credit card debt.

The increase in auto loans and other types of nonrevolving debt was 3.2 percent last year, the smallest rise since a decline of 1.24 percent in 1992.

For December, credit card debt and other revolving debt fell by 1.4 percent at an annual rate while auto loans and other types of nonrevolving debt rose at a rate of 3.8 percent, reflecting a rebound in auto sales during the month.

The 1.9 percent rate of growth in consumer credit for December translated into an annual increase of $3.35 billion, pushing total consumer debt to an annual level of $2.161 trillion.

That was slightly below the all-time high of $2.164 trillion set in September, a level that reflected large car sales during the summer months as automakers offered attractive sales incentives.

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