Chart of the day – how the habit of saving disappeared, literally:
John Kemp at Sempra Metals notes that until the 1980s personal saving was remarkably steady at around 8% of post-tax income, and it even rose slightly during the 1970s amid rising inflation and greater economic insecurity. Since the mid-80s, however, the trend is all too apparent, with deregulation and rapid financial innovation culminating in the final 100 per cent, self-certification, teaser-rate mad mortgage flurry of 2007 – when US households, in aggregate, saved nothing.
Kemp puts it in dollar terms:
US households saved around $160 billion on income of $2,160 billion in 1979.
By the end of 2007, US households saved zero (actually overspent by $300 million) on income of $11,855 billion…
The debt-driven consumer boom has reached the end of the road.