Stephen Yeargin

Today my wife and I went to the bank to close a savings account we had set aside for special, short term purchases now that our big purchase is out of the way. We will now be resuming our regular contributions to the remaining savings account. The current economic climate reminds us of how blessed we are to have two full-time jobs and a savings account to even write about.

The Economist published a preview for 2009 recently, highlighting numerous countries’ challenges and opportunities for the next year, including the United States. An article by Leo Abruzzese titled “The bucks stop here” chronicles how the average American household went from saving as much as nine percent in the 1980s to less than half a percent in 2005. That drastic shift gave rise to the manufacturing prowess of China and other Asian countries to meet increased demand at a lower cost. That trend has continued for almost two decades.

Abruzzese says that the savings rate rarely shifts more than a half percentage point in a year, but admits that these are extraordinary times. With credit harder and harder to come by and recession that is leaving few unscathed, it is likely that there will be a fundamental shift in our way of thinking, even if only temporarily. That change could send a shock wave through world markets that depend on the insatiable appetite of the American consumer.

It would appear to me that we are in the kind of mess that has no good solution. If responsible consumers increase their savings rate, the damage done to the global economy will be significant, perhaps driving some to the verge of deep depression. If the consumer continues to spend recklessly, the bad debts will further clog the financial sector, leading to more bankruptcies, foreclosures and an even deeper recession.

Aside from this Catch-22, the most profitable industry of late would appear to be those that manufacture antacids. Just when one piece of good news hits the wire reports, another blurb follows close behind warning of impending disaster. Headlines like bailout fails, bailout succeeds, investor bilks billions, states run out of money and so on scroll across our television screens and morning newspaper headlines.

It is times like these that I am glad there are relatively smart people looking at these problems and trying to find the best solutions. Meanwhile, my only anxiety stems from a $180 electric bill from NES for the month. They would likely trade with me.