Saving vs Spending

They say a penny saved is a penny earned, but when the government tries to jump start the economy it's also a penny 'not' spent. More Americans are now saving money, a trend we haven't seen in decades. Just when consumer spending could jumpstart the economy, Americans begin to save. The personal savings rate is up 10 percent over last year.

As the recession rolls on Americans are tightening up and saving. The personal saving rate fell below zero in recent years as Americans spent more than they earned. Economists now expect the largest turnaround since World War 2 with savings rates reaching as high as six to ten percent. Fifth Third Bank saw savings accounts rise ten percent from 2007 to 2008.

Economists worry pinching pennies won't jumpstart us out of recession. Consumer spending accounts for two-thirds of all economic activity. But economics professor Gbenga Ajilore says with this type of recession, one that's crippled America's largest industries, consumers aren't the answer.

Assistant professor of Economics at the University of Toledo Gbenga Ajilore Ph.D. says, "In terms of trying to boost the economy, we can't rely on consumers anymore. We need to focus more on businesses and the government. The problem with focusing on consumers is they don't have stable jobs. It's okay to focus on consumers if they have stable jobs."

One thing Americans seem to be buying more of these days are piggy banks. Retailers report spikes in piggy bank sales, maybe to get the younger generations in the habit of saving instead of the generations before who spent.

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