You Can't Imagine How High The Savings Rate Is About To Get

Waiting for a big consumer comeback? Don’t.

David Goldman argues that if you think the savings rate is too high now, you’re in for the shock of your life.

The problem is that Americans have not yet begun to save. With the largest retirement wave in history underway (bringing retirees from 19% to 25% of the population by 2020), and an enormous savings deficit, the savings rate has barely climbed up to 5%:

savings

The “normal” rate during the 1970s and 1980s with a much younger population was around 10%. With an ageing population, the savings rate should rise markedly; it should rise all the faster given the shock to wealth during the past year; and it should rise even faster given extremely low real returns available on bonds.

Read the whole thing >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.