Derek Thompson: I’m not saying it’s time to panic

[ergophobe]

I'm not saying "time to panic" so much as I'm saying it's not entirely awesome that the highest level of delinquencies since the 2008 financial crisis are coinciding with near-record low savings rates during a period of stubbornly high interest rates and rising inflation

https://x.com/DKThomp/status/2060363015883558947?s=20


Context - the savings rate has only been lower twice in the last 60 years - just before the 2008 downturn and just after the Covid reopening when Covid subsidies ran out but people were desperate to treat themselves

[rcjordan]

Not to worry...

"Academic literature would tell you lower savings rate can mean one of two things: the kind of doomer view you took, or that people have more confidence"

Bessent Says Americans Dipping Into Savings To Support Themselves Could Be A Good Sign, Actually

https://uk.finance.yahoo.com/news/bessent-says-americans-dipping-savings-191714616.html

[ergophobe]

Yes, the consumer confidence numbers definitely support the conclusion that this is unbridled optimism.

I will say that to some extent, I have considered a couple of large purchases lately using a very pessimistic take.

I think to myself, "Well, if I can buy it now, of I can buy it with twice as many May 2026 dollars after the market crashes and inflation kicks in."

In other words, I find myself starting to price in the fact that I may have fewer dollars (market downturn) and they will each be worth less (inflation), so if I'm planning to buy something in the next five years, maybe now is the time.

[rcjordan]

> planning to buy something in the next five years, maybe now is the time.

My economics senior micro-thesis was about the likelihood of hyperinflation in Uruguay  --you'd need to change that to "planning to buy something tomorrow, maybe right now is the time."