Personal savings in the good ol’ US of A have dropped to their lowest levels since the great depression. According to this article on MSNBC “The savings rate has been negative for an entire year only four times in history â€” in 2005 and 2006 and in 1933 and 1932. However, the reasons for the decline in the savings rate were vastly different during the two periods.”
During the Great Depression when one-fourth of the labor force was without a job, people dipped into savings in an effort to meet the basic necessities of shelter and clothing.
Economists have put forward various reasons to explain the current lack of savings. These range from a feeling on the part of some people that they do not need to save because of the run-up in their investments such as homes and stock portfolios to an effort by many middle-class wage earners to maintain their current lifestyles even though their wage gains have been depressed by the effects of global competition.
The article goes on to point out that the timing of this low savings era could be particularly bad with an estimated 78 million baby boomers approaching retirement. Instead of saving for retirement many boomers are spending all of their income and then some.
Unfortunately Americans aren’t the only ones with this problem. From the most recent data I could find The BC provincial savings rate was -7.9% in 2004.