To Save, or to Spend--that is the Question

Just the other day I read an article in The New York Times about the goings on at Wall Street. It wasn’t the headlining article, but it did make front page. The article started by informing readers that while Wall Street is no longer at the brink and confidence is returning, the American people should now be concerned with how little they are spending. It is acknowledged that in the last few years people have spent as much 91% to 99% of their yearly incomes, and thus need to begin saving for retirement or to pay off debts. Yet the article still insists that if people change their spending behavior too quickly the economy will take another downturn.

A few weeks back on the stock market, the Dow Index was down by several hundred points. Given this alone I can agree that the economy is indeed in a slump. What I cannot understand is why the media— The New York Times —is protesting when people intelligently and rationally make the decision not to spend almost the entirety of their incomes. Everyone needs fallback money in case the worst should happen and no one will have fallback money if the entire paycheck is spent.

Certainly the economy is hurting, though I can’t help but wonder if some of the commotion about the economy and the stock market is largely agenda-setting. The more people read about and hear about the economic downturn, the more they will worry. Perhaps a side of effect of this worry is Americans suddenly saving more than they have in recent years. If media is indeed trying to reverse, or at least slow, this ‘new’ notion of saving, it seems to me all that’s happening is a reinforcement of capitalistic ideals.


If any of you are interested in checking out the article yourself, take this link:
http://www.nytimes.com/2008/11/12/business/economy/12leonhardt.html?_r=1&sq=buying%20binge%20slams%20to%20halt&st=cse&adxnnl=1&oref=slogin&scp=1&adxnnlx=1226638667-CkFeueC5DEeNHvcA/ypqhw

Or go to The New York Times website search it out manually: Buying Binge Slams to Halt by David Leonhardt.