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« Lessons of the Financial Crisis from Bill Dudley | Main | Two Approaches to Employee Productivity »

November 24, 2009


Jim West


How does protracted long term unemployment affect spending habits, both psychologically and from a spending / savings standpoint.

If the 5% who have been thrown out of work take five years to become fully employed, and the remaining consumers have that looking over their shoulder won't that tend to keep the spending rates down?



Great post. Appreciate the objective analysis on the historical data. I too wonder about persistent employment underutilization (BLS U-6 statistic). I wrote an article entitled "Consumer Behavior And The Paradox Of Thrift" some number of months ago... and welcome your feedback on it:

Scott Quick, ThinkOregon

Laurence Hunt


I've always associated the lowered savings rate with the Greenspan era. (1) Excess liquidity fuelled by low interest rates which punishes savers. (2) The guarantee that liquidity will be used to fix every economic problem and to short-circuit the business cycle.

Now, of course, we are punishing investors with low returns on invested capital - a whole story in itself. With investments souring, debt levels unmanageable, and insecurity rising, saving again makes sense.

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