A little over a month ago in StreetAuthority Daily, I talked about how the U.S. has been stuck in a spendthrift, “Frugal Nation” mentality. As I said then: “Right now, the economic outlook is muddled at best, as it has been for much of the past five years since the financial crisis. Depressed wages and a large amount of people collecting unemployment means there just isn’t enough money around for most consumers to spend lavishly.” I maintain that this consumer “money hoarding” behavior isn’t going away anytime soon. And… Read More
A little over a month ago in StreetAuthority Daily, I talked about how the U.S. has been stuck in a spendthrift, “Frugal Nation” mentality. As I said then: “Right now, the economic outlook is muddled at best, as it has been for much of the past five years since the financial crisis. Depressed wages and a large amount of people collecting unemployment means there just isn’t enough money around for most consumers to spend lavishly.” I maintain that this consumer “money hoarding” behavior isn’t going away anytime soon. And recent news from the Federal Reserve confirms this — noting that banks have put away close to $2.8 trillion in reserves and households are sitting on $2.15 trillion in savings — a 50% increase over the past five years. The Fed report goes on to explain that because people are sitting on cash, rather than spending it, the “velocity of money” in the economy has slowed, which in turn has led to relatively low inflation and a slow-growth economy. As two leading economists from the St. Louis Fed explained:… Read More