Economic Newsletter
“Wait, Is Saving Good or Bad? The Paradox of Thrift”
The average saving rate for the typical American household before the recession started in 2007 was 2.9 percent; since then it has risen to 5 percent. Uncertainty about the future was the primary driver for the increase. More saving is a good thing, right? Well, some economists argue it might be...
“Dewey Defeats Truman”: Be Aware of Data Revisions
The famous"Dewey Defeats Truman" headline illustrates the importance of timely and accurate data. Agencies that compute economic indicators for the $14 trillion U.S. economy face a tough challenge: providing up-to-the minute results and ensuring the reliability of the data. This...
Gini in a Bottle: Some Facts on Income Inequality
Income inequality has been rising in the United States and other developed countries. The March 2012 Page One Economics Newsletter discusses income inequality, its causes, and some possible policy solutions.
Glossary
Definition of the Week
Paradox Of Thrift::
A controversial Keynesian economics theory, which proposes that if everyone tries to save a larger portion of his or her income during a recession, then aggregate demand will fall. As a result, the theory argues, everyone would grow poorer instead of richer due to the decreases in aggregate consumption and economic growth.
Related Reading
May 1, 2012
Personal Saving and Economic Growth
by Thornton, Daniel L., Federal Reserve Bank of St. Louis Economic Synopses, No. 46, 2009.
Many analysts fear that a rising saving rate could hamper the economic recovery.
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May 1, 2012
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