Americans Run Out of Options to Boost Their Spending
With the economy strong and both inflation and unemployment low, why don't American workers feel better about it? Nearly three-fifths of those questioned in a Time Magazine/CNN poll last week said they did not "personally feel better as a result of the recent improvement of the economy."</br></br>Some analysts suggest that it is because workersÛª standards of living are not rising noticeably. Many of the newly created jobs pay relatively low wages and often have few benefits, while people who have had jobs all along resent the fact that their incomes are barely keeping up with inflation.</br></br>that inflation-adjusted incomes are not going up, it's that consumers as a group have run out of ways to buy more goods and services even when their incomes are stagnant.</br></br>The chart at the right shows one important means U.S. households used in the 1980s to keep their consumption rising when their real incomes did notÛÓtheir current savings.</br></br>In the 1960s and 1970s, personal saving generally dipped to about 6 percent of after-tax income during economic booms and rose to 8 |>ercent or 9 percent when the economy slumped and saving for a rainy day became more popular.