Monday, August 3, 2009

Savings Rates Going Up, Up and Away

Before anyone thinks the economy is going full steam into recovery, I would like to bring out some statistics to bring us down to earth.

OECD recently has published household savings rates (net savings) statistics based on disposable household income and I'm bringing out some countries' household savings rates as an example:

Country 2008 2009 *
Australia 2.6% 5.4%
Canada 3.7% 5.1%
Denmark 0.6% 5.0%
Finland -0.9% 5.0%
Korea 2.8% 5.1%
Norway 2.0% 4.6%
United States 1.8% 5.4%

* 2009 estimates

Savings are good, especially for those countries where retirement is self-funded, but if people are saving more (especially United States), where will the strong demand for goods and services come from? Do you think China and India can take up the slack? Do you think developing countries can save the day?

Beware of the current "rosy" outlook. Governments are right to say that the recession still have some ways to go.

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