About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Tuesday, August 02, 2005

The 0.0% Savings Rate

Consumer spending surged at a nearly 10% annual rate in
June reflecting strong auto price promotion and sales.
The savings rate fell to 0.0%. With money funds in the
2.8 -3.5% area, there is no incentive to save when the
real return on these funds is negative after adjusting
for taxes and inflation of 3.0%.

This is another reminder that short rates need to rise
significantly further to start to regain a better
balance between consumption and savings.

No comments: