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Old 01-13-2010, 05:30 AM
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wiedemab wiedemab is offline
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I went to see Martin Feldstein (Harvard Economics Prof.) speak at an Economic Club of Indiana event up at Eli Lily a month or so ago and he warned of this exact thing - the double dip.

The stimulus "propped" the economy back up, but unfortunately the base isn't there to support this level of economic activity and it may falter again.

He advised the monitoring of the personal savings rate as an indicator of where we are headed. He was a bit vague on the exact numbers, but if I remember correctly - if the personal savings rate rose to near 6-8% we would be in trouble. If it stayed below 4-5% we may be OK, and if it went to around 1-2% we may see a significant recovery. There is a fine line between a savings rate that allows for healthy economic growth and unhealthy growth - case in point the mess we are in now.

The other problem is that the data that I seen on the Personal Savings Rate is lagging, so we won't likely know (from the data) that it's gotten worse until we already know it from experience.

http://www.bea.gov/BRIEFRM/SAVING.HTM

There are obviously way too many variables to consider, but I thought I'd toss this one out there.
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