Report
Will the United States experience the misfortune of countries with low savings?
The United States has a very low national savings rate, primarily because of the low household savings rate. Countries like the United States that have low savings can encounter difficulties : As soon as the investment rate rises, the external deficit becomes significant; A currency crisis (balance of payments crisis) can then break out if the capital inflows needed to finance the external deficit stop; This shows that the low US savings rate is sustainable only as long as the dollar’s reserve currency role persists; a decline in this role would force the United States to save more (for example with a more restrictive fiscal policy) or to invest less (for example because of the rise in dollar interest rates), or to accept a depreciation of the dollar to the point where sufficient short-term capital inflows appear.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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