DEJA VU: U.S. personal savings rate plunges to pre-recession low of 2.9%

It’s deja vu all over again.

Prior to the economic collapse a few years ago, Americans splurged on everything and saved nothing. A decade later, it seems like Americans have not learned from their past mistakes. With Christmas in the rear-view mirror, you are probably terrified of opening up your credit card statement in the next couple of weeks.

According to the latest data from the Department of Commerce, the personal savings rate declined (again) from 3.2 percent to 2.9 percent, the lowest it has been since November 2007. When a financial emergency transpires, consumers won’t be heading to their savings or emergency fund, but rather their credit cards and home equity.

Scary.

Meanwhile, U.S. consumers spent at an accelerated rate as personal spending rose 0.6 percent. Could they afford it? No, because personal income levels only climbed by 0.3 percent.

It is true that consumers are quite confident about the national economy. But they shouldn’t.

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