Americans spent more than they earned in 2005

January 31, 2006

Americans are spending more than they are earning, pushing the national savings rate to lows not seen since the Great Depression. The Commerce Department released a report saying that personal savings fell to a negative 0.5% in 2005.

This means that people spent everything they earned and more. This is the third time that the savings rate has been negative, the previous two times were both during the Great Depression in 1932 and 1933. The savings rate has been declining since 1984 when it stood at 10.8%, in 2004 it was 1.8%.