In 2006, the U.S. personal savings rate hit its lowest level since the Great Depression, according to the Commerce Department.The agency said that the country’s savings rate for all of 2006 was a negative 1 percent -- meaning that not only did people spend all the money they earned throughout the year, but that they also dipped into savings, or increased borrowing to finance purchases.
The 2006 figure was lower than a negative 0.4 percent in 2005 and was the worst showing since the country registered a negative 1.5 percent savings rate in 1933 during the Great Depression.
According to an Associated Press report, the savings rate has been negative for an entire year only four times in history -- in 2005 and 2006, as well as in 1933 and 1932. During the Great Depression, of course, one-quarter of the labor force was without a job.
Commerce calculates the savings rate by taking the amount of personal income left after taxes are paid (disposable income) and subtracting the amount of spending.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access