Household Savings Are Massively Higher Than Previously Thought
We have argued that a consumer-spending-centric model of economic growth is not a useful model because it fails to reflect the incentive-based nature of the economy. There are many who disagree and have worried that a low and declining savings rate signaled that U.S. households were becoming stretched and that a pullback in spending might dampen growth. However, it now turns out that the savings rate hasn’t declined at all and is more than double the rate that was previously reported. Not only should consumer-demand-side modelers be far less worried about the outlook, they should be thinking about just how valid arguments can be that are based on data that can be so massively upwardly revised.
RDQ Economics provides global macroeconomic consulting services with an emphasis on U.S. economic fundamentals and monetary policy.
Our views are driven by consistent application of classical economic and monetary principles and has generated superior anticipation of changes in the stance of monetary policy and of movements in economic growth and inflation.
The founders of RDQ Economics, John Ryding and Conrad DeQuadros, have a combined experience of 26 years on Wall Street, 12 years of experience in central banking at the Federal Reserve and the Bank of England and nine years in the independent research space. John and Conrad have worked closely with fixed income, foreign exchange, and equity traders and portfolio managers, which has enabled their analysis and advice to be tailored to a clientele that is focused on trading and investment decisions.
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