Spend, Spend, Spend

From Seeking Alpha:

"The Commerce Department reported yesterday that Americans had a 2006 savings rate of -1% -- not only did they on average spend everything they earned, but also dipped into their savings or borrowed money to finance their spending.

2005 savings were -0.4%; this year's figure is the worst since the -1.5% figure of 1933, in the midst of the Great Depression. The rate has now been in negative territory for 21 straight months; 2005-06 is the only the second time it's ever been negative, the other being 1932-33.

Economists have various theories to explain the current lack of savings, from over-reliance on a strong economy/home equity to a consumerist mentality that drives people to spend even when they can't afford. In other figures released yesterday, consumer spending rose 0.7% and incomes rose 0.5%, both in line with forecasts. The Institute for Supply Management said its benchmark index came in at 49.3 last month, down from December's 51.4; anything below 50 is considered contracting. From the Department of Labor, initial unemployment claims were down 20k to 307,000, pushing them to their lowest level in a year.