Granted, we’re nowhere near the levels of individual consumer spending1 we saw in the heyday of the real estate and stock bubbles, somehow, some way, Americans are still able to afford all of the gadgets, dinners out, and good times of yesteryear.
The following chart from the Federal Reserve may explain how this is happening. It’s something we’ve implied over the last couple of years with anecdotal evidence, but this is proof positive that the consumer is now down to the wire, trying to maintain some semblance of the life they led before the greatest depression took hold:
This chart depicts the inflows – and in the case of recent years, the outflows – for individual financial assets like personal investment and savings accounts for the last 60 years.
One thing is perfectly clear: Americans are spending their hard earned savings at an unprecedented rate.
Over the two years ending September 2010, Americans withdrew a net $311 billion — or about 1.4% of their disposable income — from their savings and investment accounts, according to the Federal Reserve. That’s a sharp divergence from the previous 57 years, during which they never made a net quarterly withdrawal. Rather, they added an average of 12% of disposable income to their holdings of financial assets — including bank accounts, money-market funds, stocks, bonds and other investments — each year.
Source: WSJ
Saving is now a thing of the past. As Americans continue to live the illusion (or perhaps, delusion) that the economy is the same today as it was in 2005, we’re having to dip into savings to maintain the lifestyles to which we’ve all become accustomed.
To be sure, a good portion of those withdrawals are a direct result of our unofficial unemployment rate topping 22%, as well as rising costs for essential goods like food and energy, but some of those savings are likely making their way into the economy via the purchases of discretionary and luxury items like consumer electronics, new cars and family vacations. If a retailer can’t provide the credit, what choice does a consumer have but to hit the money market account to make sure they can watch the Super Bowl on a new 3D HDTV?
Our economy may be faltering, and people may be going broke and hungry, but some will never give up the dream until every last penny is spent. Afterall, America and the rest of the world couldn’t possibly be on the brink of a catastrophic economic collapse.
As prices for commodities continue to rise, jobs remain non-existent and the majority of people hold on to the idea they can over consume with reckless abandon, we can expect that the historical inflows to savings-based accounts will remain outflows for years to come.
Hat tip Tom of the North
1. Consumer Spending 1947-2010
Until late 2008 I was a spendaholic. Don’t get me wrong, we never spent above our means, but our means were good and we spent it! We had very little savings and just “stuff” to show our wealth.
That all changed. Since then we’ve totally altered our lifestyles. We put our older teenager on a strict budget. Fortunately the younger teen never spent much anyway. I’m glad I taught my kids the importance of frugality before they leave home.
I’m proud to say that we now live a far less materialistic life, we have all our needs taken care of (plus a very few wants) and we have a wonderful, fat savings account as a result. Along with a lot less stress.
I watch my neighbors. They have not changed their behaviors one single bit. They spend & spend, eat out, buy new cars, keep their gym memberships, new furniture, clothing, you name it! They are so unprepared it is unreal. They have no idea how little that new car or designer jeans will help them when things fall apart.
Yep…..true for me. Â
Soon as I hit 59 1/2, I took the last 7,000 bucks out of my PPP ( piss poor performing ) Roth and bought more solar panels, so the power company could start paying me 75 bucks or so a month. I figure 900/yr is a better return than the stellar less than zero it had done for the last few years…and at LEAST I know where my money is at night, even if it’s not working too hard then……ahahhaaaaa
TNAndy, please share more details about your solar panels. Brand if possible, total cost, do they work well? is maintenence a problem? Did you put them in or have them put in? Been considering it but don’t know a darn thing about them.
Comments….. I totally agree with ht eheadline, never, never, never have I seen such blindness in and economy that is on the very brink of collaspe. I really am not a gloom and doomer, but all the facts point to the conclusion. Nearly every state in the Union is in some sort of finiancial turmoil, yet, as obvious as it it, people are buying like no tomorrow. Resturant parking lots are filled to capacity and clothing stores are selling at lowest prices I have seen in years, good? Well, how much stuff can one “stuff” into a house before the house finally blows.
We as Americans will never “get it”.
We are all going to pay the ultimate price for being so materialistic.
Comments….. We’ve lately been spending money on repairs–cars, dental work, then on personal protection. Gearing up for the future and not spending on frivolous stuff. Think about all the millions of people who quit paying their mortgage and have all that extra money to spend however they choose. I guess that’s their last hurray. Live for today and don’t worry about tomorrow.
everything will be ok. i think obama’s speech was wonderful. he is energetic, smiles a lot and shakes hands with all the right important people.
normalcy bias?
new web bot report is out – scary stuff – http://www.halfpasthuman.com – earth changes making horrible food shortage crises – fires, floods, droughts, famines, mudslides, extreme cold, magnetic pole reversal –
What an “exciting” time to be alive. There will be many mutations from the radiation from the sun due to the pole shift – electric devices will not work right and people will go crazy – dollar death coming soon…
Whooopppppeeeeeeeeeeeee!
Store food.
mushroom – good to see you back here – you are right – everything will be okay – but I believe in reincarnation and that we all make it out eventually…just curious – what is your definition of “ok”?
This brings up a good point.
If one anticipates the US dollar a becoming increasingly worthless going forward, then isn’t it a smart move now to exchange it for something tangible?
Be those ‘tangibles’Â solar panel or even jeans, at least they have value to you if you in fact needed them.
Personally I’m storing as much as possible of my ‘wealth’ into things and out of the USD. I can see Chinese and all foreign made goods increasing in price in the future and it’s not practical to store oil or gas. So tangibles it is.
Also, just a FYI considering what site this is … I already have the PMs,guns,ammo,food & doomstead mostly covered.
And speaking of PMs, this current correction should serve as a reminder that it’s not wise to have all ones eggs in just one basket.
GA mom…..rather than mess up this thread, email me
[email protected] and I’ll respond.Â
@michelle…the only definition I have of ‘ok’ is to have lots of crisp $10 saved up…otherwise I’m clueless.
TNAndy, for $7k you got a couple of solar panels, inverter, a set of the cheapest (or even used) storage cells.  Enough power to power a TV set and maybe a computer.Â
It would take an investment exceeding $50k in order to replace 800kW/hrs per month. And in 8 years you’ll have to replace your storage cells, 10 years on the inverter, and 20 years you’ll have to replace the panels.
Even with generous taxpayer subsidies, when you add up all the costs including maintenance and failure, solar and wind generation is at a net loss.Â
Try our new build it yourself perpetual motion generators, just send me $499.95 for the pamphlet.
Guillible Joe: I believe TnAndy said he bought more pv panels. Do you take Iraq Dinars?
OK, Joe..said I wasn’t gonna mess up this thread, BUT:
This was “round 3” of add on to my existing system.
For 7k, I bought 10 – 2450w Solarworld panels (628ea) and another charge controller ( already maxed out the two I have), an Outback FM80.
Panels have a 30 warranty, by the way.  I DO have a battery backup system ( which if you grid tie ONLY you would not have, nor need the charge controllers ), but the battery bank is a 20 year rated AGM type.
For a total of 27,000 ( all three rounds ), I will produce about 600kw/hrs/month, based on what I see of the first 2 sections over the last 2 years.
I have a contract with TVA where they pay 12cents/kw/hr OVER retail ( which is about 9 cents right now ), or about 21 cents per kw/hr for all solar production ( separate meter installed by them ) Assuming this next set produces as well as the first two ( 18-175w Solarworld panels ), and I think it will actually do better, since I didn’t put the first two sets in the best location I had, and these will be, AND I’m gonna mount these on double axis trackers (home made ), where the others are on single axis, my guesstimate is they will pay me about 75/mo.  Last 6 months average has been I paid THEM 16 bucks/mo.
AND guess what……I don’t REALLY care what it costs, or what the payback period is……that they will be paying me is just for fun.
The REASON I put the system in was not payback.…but to have electricity IF, and more likely WHEN, the grid fails. I wanted enough power to provide basic refrigeration, some lights, and use of the washing machine. ( which round 1 and 2 covered…..round three is just for fun, and the fact it provides a 12-13% return rather than NOTHING the Roth was doing….actually LESS than nothing if you factor in purchasing power ).
It’s like a whole house backup generator that pays some of it’s own way.
I agree George, always put PM’s in two or more baskets.Â
Corn, wheat & oink oink are up today. Is it too late to tour all of Egypt? Nabisco, e-mail won’t go through.
I’ve spent more money in the last six months than in the previous five years. Since I recouped most of my market losses from 08/09 I see this as a great opportunity to isolate myself from suffering such abuses in the future. Commodities. commodities, commodities. Oh, and by the way, you CAN eat some commodities. LOL
Anonymou,
Yeah….email works. IF you copy the link rather than click on it, there is an underline between the “a” and the “Q” that doesn’t show up in the way the link is posted…..you may be missing that ?
Savings might appear to be dropping because more and more people are convinced that the bomster will sooner or later take our IRAs and 401Ks to pass along to the banksters. Â Have it in silver and gold and defend it with lead.
I see two explanations for this spending. Either the “condemned ate a hearty meal” or there are millions using mortgage money not going to the banksters as a “free gift” while awaiting the foreclosure hearing.
If  TVA is paying you $.12 kWh over retail who do you think is paying the diofference? The other rate payers. Can you spell Ponzi scheme. Your solar panel purchase is also subsidized by the tax payers. Think about it, if solor panels (photovoltaic) was practical would it need heavy subsidies from the government and heavy subsidies from the power company??
I for one am guilty of withdrawing $ from my savings account and 401 K and every where I could find some $. Then took all that cash and bought precious metals while it still had some worth. Then found more and got my food storage in order and the ammo was on my list. I see a lot of sheeple that still have no clue but have my family working on there survival basics as well as many of my friends
I can tell you where a large portion of the spending is coming from. It’s coming from the money that would otherwise be going towards people’s mortgage payments as they squat in their homes daring banks to foreclose on them. Right now large banks like BofA have halted foreclosures in about half of the states. This is a free ride for those who are willing to take advantage of the system.
Better to subsidize individual homeowners for their solar and wind systems then perpetuate a one trillion dollar subsidy to the hydrocarbon industry every year. (And I say that as a lease holder).
Every family and taxpayer ought to be dividing those dollars up!
I don’t think your considering capital, up keep, property taxes, life term of products GWTW. Sounds smart to me if you have the previous stated.Â
Gone:
Yep…other rate payers ARE paying my 12 cents….they sign up to buy blocks of “green power” at higher rates ( voluntarily….no gun to their head ), and that pays people like me to produce it.
As to the govt subsidies, you MIGHT wanna check out every single energy source going, because you’ll find subsidies and “depletion allowances” and such in each and every one. Â
AND, I might also point out, without massive govt intervention, such as the REA in the 30’s-50’s, a WHOLE LOT of rural American would still be using kerosene lamps.
So quit yer whining……
TnAndy…thanks for the info – we want to start small and just keep three freezers running and then gradually go whole house. Thanks again
Comments….I have cleared out my savings and put it into prepping items and precious metals.Â
I closed my CD and put it into precious metals.
I have been spending money on things I know I will be needing in the future and on fixing my bol for retirement living and sustainability.
The value of a $ has gone down so much that anything you buy now to use later is $ well spent.
How to pay off the national debt…Â Pay per view..
Bum fights
Death row executions
Federally sponsored porn competitions
Other ideas…..Close all overseas bases,
Kick out all foreigners,
Tax tobbaco 500%.
Tax on Welfare if you’re in it for more than 5 years.
Tax the shit out of Walmart for destroying America.
I took the last of my 401K out and bought freeze-dried foods, silver, gold, guns and ammo. Instead of putting money into a savings account, I accumulate enough to buy some more silver.
we are getting ready to draw out  the 401k via monthly checks.  How are all of you going to live in retirement if you spend (draw out) all of your irs’s/401k’s??  Besides, most of us  no longer are under the old pension plans.  If nothing happens,  when you retire, you’ll live on SS only,  unless you  sell off the pm’s.  I’ve heard about shtf  way  before home computers via books written about it in the 80’s, yet life goes on thirty years later, living better than ever.  Plus pm’s  go up and down in the futures mkt.
I love seeing so many people preparing.
There are plenty of people out there that have Plenty of money to keep spending. As you drive to work, look how many new cars are on the road. ALOT..
Thanks for the solar info TnAndy.
BTW folks, I was at the grocery today. Bread is $2.99 per loaf! With prices like that they won’t be spending on “wants” much longer.
While much of America is spending those $s on frivolous crap, much of America are like the ones on here and like me. 2 years ago I stopped contributing very much to my retirement accounts. They lost so much and it appeared to me that it was all gonna blow up again. I had my fianancial guy put it all in guaranteed stuff that yields about 3 to 5%. Now I just contribute about $80 a month so I can get my “matching”.
The extra money has been going for food, silver, guns and ammo. In the last year I’ve purchased, legally and off the books $2000 worth of “investment quality” guns. No, not stuff that have collectors value, but guns that are useable for either hunting or self defense. Guns in fair to good condition. I’ve also purchased about $3000 (in pre-$20/oz) silver in the last year. I also purchase at least $100 in either reloading supplies and extra food each month.
I’m a contributor to the reality that chart shows. I used to put $500 a month in retirement. No more. Not after getting my a$$ burned and the inflation is just eating stuff away like its nothing.
Guns, Ammo, Silver, Food, Fuel – Savings the 2011 way!
What I notice the most about the current conditions is how the police state appears to be expanding. With more and more people getting murdered by the cops (and also more felons killing cops), I just wonder if we’re not going to see a head to this soon.
I sure hope so. When they run out of money to pay the state sponsored thugs and regulators will be the day I jump for joy!
Back when I was a kid in the last century before this one,Â
the saying was America was going to the poor house in a Cadillac.
I guess we can upgrade that to a BMW now .
Just be thankful everyone is not stocking up and buying the same things your buying.
This is your period of grace. You heard the word. You saw the light.Â
Everybody is not privy to this information.
Go about your business with all diligence. Help those that ask. Bid good day to those that waste your time.
Keep moving forward.
At least some ‘get it’.
Most 401Ks have limited investment options and those that exist are there because the Banksters directed their paid-off congress to direct the masses to them. Stocks & bonds these days are ponzi schemes devised by those already corrupted. And now there’s moves afoot to force those with 401ks into buying Gov bonds.
Great, first the gov forces you into contributing to SS and Medicare … only they spend that revenue as soon as it comes in on endless wars, buying re-election votes and other boon doggles. Next it will be taking over your 401K.Â
I stopped my contributions on account of the above. Even the matching company portion and tax deductions won’t account for what the gov wants to soon do to those funds. Better to walk away now and isolate yourself as much as possible from the bankster controlled government.
And that’s exactly what it is.
Wall St/the big banks  CONTROL  the US government.
The President & Congress & the Courts & the regulating bureaucrats have been bought off by the billions the Banks have thrown into “campaign contributions’ and the like.
So, to those wondering what they should do in they’re ‘later years’ to get by   … well, first you have to survive to get to them.   Stored food, PMs,guns and community are your lifelines as things fall apart. The government (especially the federal) is an obstacle between you and security, that’s because the government is intent on sucking as much out of you as possible to feed the banksters and their bad investments.
Anyone here watch or read BOs state of the union speech?
Do you believe any of it?
Empty Promises …. just like his ‘hope & change’ line before being elected. All created by speechwriters, under direction by spin-ministers and read from a teleprompter by the teleprompter-in-chief—- Barrack-the-foreign-born … the Wall St/Bankster advocate (oh.. who also happens to be the current president of the sinking  …. US of A)
Last year I cashed out a small 401(K) account, cashed in a bunch of savings bonds, and sold some stocks. Bought PMs, more guns, ammo, food, etc. I figured that I might as well trade those just about worthless FRNs for some things that are going to be worth something later on. I live in the rural deep south where it doesn’t get too cold (relatively speaking), the growing seasons are relatively long, I have a creek which runs through my property, I own enough land to grow and hunt on, and have a lot of friends and family nearby. I am a retired military veteran so I have a military pension which would pay my property taxes. That is basically my retirement plan as long as us veterans still have a military pension. If that ever goes away than there are a lot of other things that have gone worse to get to that point. I’m about ready for the games to begin, but I still prepare a little more each day.
Comments….. We are spending a lot of our savings on the payoff our mortgages (rental too), solar panels, buying food storage, health, cleaning supplies, extra clothing, shoes and staples that do not go bad quickly. Why leave it in the bank getting zero percent or even worse, have the bank fail with the FDIC broke, or our savings  dollars devalued?
Comments…..Best use of the saved monies is to pay your debt, if any. Second comes buing well known gold coins [purity and weight]. Then skills.
And never spend more than you make, ever!
More money is coming out of financial assets than is going in? Hardly surprising given the widening realization by those paying attention that its a confidence game. I was a buy and hold kind of guy until the 2008 crash. Held on stubbornly even after that, until I noticed my retirement savings rising or dropping based on what Bernanke was doing.  Saw big bonuses paid to Wall Street and little paid out in dividends and that was all she wrote. Withdrew money “prematurely” from the 401k in 2010 and am being smarter with it.Â
I figure its a no-lose situation. Taxes and penalties hurt, but the security is sweet. Guaranteed that if the government didn’t take it or inflation wipe it out, taxes would get it. No brainer.  Still see lots of folks spending like there’s no tomorrow. But, there’s got to be something else going on than people simply squatting in their homes.  There can’t be THAT many folks in trouble with their mortgage.
Choke on this:
http://www.bloomberg.com/news/2011-01-24/wall-street-partying-in-davos-as-bank-ceos-overcome-angst-after-crisis.html
Comments…..GA MOM, where the hell are you shopping?Three dollars for a loaf of bread? Is it a muslim owned grocery? Bread here is a dollar for a loaf and many sales have it under a dollar. Please stop supporting your local muslim grocer who rips you off and sends the money to terrorists who kill our troops.
Comments…..GA MOM, I am also in Augusta and I don’t pay 2.99 for a loaf of bread. You must be shopping at Piggly Wiggly.
Comments…..
I acquired an 8 ft wide, 8 ft tall, 2 feet deep shelfing from a friend (7 shelves) ….each time I enter the room and see the display (canned goods are elsewhere) I think I’m crazy and have absolutely lost my mind!!!
Comments…..
I agree with the vast majority of all of you. I closed out my 401K (took a beating) but purchased many things tat will be able to be bartered. Food, ammo, clothing etc… I am fortunate by living also in the rural South. Well the old saying, “a country boy can survive”, is true and should me the mantra of all of us. I believe this thing is going down much faster that any of us expected.
Unemployment, economy, housing, muni’s crashing, commercial properties, home foreclosures, bankruptcies, European nations rioting in the street, just to have necessities of life. At this point, America has yet to experience the storm that is about to strike.
But I am convinced it is coming.
As the headline says, many folks out there, yet to either lose thier jobs or homes feel they will not be affected, in time, they to will be impacted.
These are the foolish people that I fear the most. Obviously they have not prepared for any onslaught, they will be the first to go “rabid”. especially when they are no longer able to go out to eat 4-5 times a week or get thier “nails” done or play golf every weekend and wallow around in thier little golfcarts.
there is a number of reasons people are dipping into savings. Many are using it to buy silver and gold while others are doing home imporvements. Also, no one is adding to a savings account. They are worthless nowdays. so why bother?
people have been using credit cards to maintain thier standard of living over all. That bubble is about to burst and then we will really see the true depression.
Two HUGE updates that will affect us all. For those leery of the dipping prices in metals, it’s all about the short covering, and nothing to do with market forces. All manufactured. Buy on the dip!
But on that note, this is a monstrous development in PMs. Get them now. The clock started ticking officially just days ago! According to the figures stated by Harvey Organ.com, the current quantity of metals, standing for delivery (Feb for Gold, March for Silver), is officially large enough to crash the crooked investment banks and COMEX! You can set your watch by it! More ounces are about to be delivered to customers than the COMEX and JP Morgan have to deliver! So once March comes, those of you without silver will not be getting silver, and it is anyone’s guess how high this will blow, as many others still in paper metals will be fed to the lions. And every additional ounce of silver added to the coming month, only amplifies the explosive effects!
Second, as of this morning, the Egyptian riots have taken a mind-blowing turn! The guards protecting the Suez Canal have been overtaken. These Egyptian guards have refused to fight against this resistance now underway, and have given up their post! The Suez Canal is now being seized by protesting, non-authorities! This will cut off the vital, oil and commodity shipping lanes to the Mediterranean! Oil price bump coming???
Hang tight, all, and keep prepping. It’s unfolding much faster than any MSM news source would have us believe!
Maybe….Just Maybe everyone is doing what I have been doing for the last coule of years….taking “money” out of my retirement and buying PM’s and prepping. i started by lowering my 401K deposits and then stopping all together. Pulled “money” out and bought tangleable items that I can use.
I consider this just changing my investment stragety
“God rest the souls of that poor family…….and pussy’s half price for the next 15 minutes!”
– Al Swearengen
The county in Long Island, NY is having a little problem….. They’re broke!
Durango:Â There are no subsidies to oil companies that is all left wing propaganda.
And it is NOT better to subsidize individual homeowners or ANYONE.Â
Under $1.00 for a loaf of bread!!!! Is that the nasty stuff made with high fructose corn syrup and no nutritional value? A loaf of nice quality bread (but not the best) is $3.99 here in the San Diego area. But then it has been 80 degrees here, sunny and clear. So beautiful. Maybe it is part of our sun tax!!
Gladys…I just got done watching the first season of Deadwood. My friend has been recommending it for years but I haven’t seen it until now, WOW is it good, McShane is fabulous as Swearengen, and Jane, what a character!!! The doctor is fantastic as is Farnum, all B actors doing a bang up job. Can’t wait for the next season to post on On Demand!!
GWTW: The hydrocarbon industry in America receives a One Trillion Dollar subsidy from the American taxpayer every year. It is not propaganda from any side, left or right. It is an economic fact. Read more. Post less.
Actually, I think it would be a very good idea to pick up the pace and the amount on current solar subsidies for homeowners to wean US off of hydrocarbon and put the money back into the pocket of the taxpayers; as it is primarily the US homeowner that pays the taxes in this country.
On a large scale it would cut our dependency on foreign oil and help US balance of payments. It would only take a 100 mile square area in the Arizona desert to provide ALL of the energy America needs every year, using current solar technology.
At the retail level it could create millions of new, meaningful jobs and help American families become energy self sufficient. Self sufficiency means greater personal independence. Think outside the box.
Still, Clueless In Atlanta! 🙂
OK Durango, I’ll read anything you can point to that supports your claim that the hydrocarbon industry gets a Trillion Dollar Subsidy. Just make it credible sources – no uTube videos, no posts from anonymous sources at Infowars, OK? Â
Oh, and that guy who invested his 401k in solar cells? Whaddaya gonna do when those things wear out in ten years (or less) and your “investment” is worth zero?  Sheesh !   Â
Why not just drill out our own oil before it is drained by foreigners drilling closer and closer to our shores?Â
Why finance other countries’ oil drilling and deny us the ability to do it for ourselves? (Brazil)
Our machinery runs fairly efficiently on oil and is outfitted to use it. When oil is no longer cost effective, other methods will pay for themselves.Â
That being said, we have waited too long to start drilling for our own and expect independence. So, other fuel sources are now a necessity if we want to be independent. I just love how the gov’t creates a problem and then forces their pet solution on us.
Thanks for the insight, Dennis. I don’t follow the silver market every day. Perhaps it is a good time to run down to the local coin seller and gather up whatever silver they have left on hand!
Anyone have any idea of prior instances where commodity deliveries could not be made? I’m wondering what the consequences will be. Seems like a huge supply shock will result–perhaps silver will finally outprice its yellow cousin?
Oh, There you are Merlin: The One Trillion Dollar subsidy is common knowledge in the industry and it is in public domain. It is called tax breaks. Do your own research. I don’t have to prove anything to you. Don’t care if you believe me or not.
BTW the “link” didn’t work. I will try again when I have more time.
As for the ten year life cycle you project for solar cells, yes they will probably be economically obsolete in ten years the way technology is advancing, but they will not have “worn out”.