
Americans ratcheting up their savings
UniCredit Group − Households. The US personal savings rate has literally skyrocketed to 5% in recent months. One year ago, it was near zero. The culprits are the despondent labor market, but primarily the gigantic losses of wealth. They are now equivalent to 1½ times annual income. That will drive the savings rate still higher (cf. chart), imparting a continuing drag on consumption.
Companies. Corporate results are also coming under increasing pressure. The earnings erosion in the first year of the recession was the strongest in the last 50 years. Corporations were reacting exceptionally quickly to the crisis by cutting personnel, capping costs and slashing their capital expenditures.
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