Consumer Spending Down and Savings Rate Up

It's the beginning of the month, so that means that this week will be filled with reports on various economic indicators. The latest indicators are from December 2008: Consumer spending is down and the savings rate is up. Not surprising in an economy in which personal income is falling.

Honestly, this recession is prompting a large amount of reflection regarding choices made by individuals. Even though our income hasn't been impacted (yet), my husband and I are still making decisions based on what could happen. We are spending less and saving more. We were already saving, but the idea of having 6 months of expenses squirreled away is compelling, and our current fund just seems inadequate -- considering what could happen.

Taking proper precautions against the future is reasonable in the current economic climate -- especially since the economic stimulus bill wending its way through Congress is unlikely to do much to help your individual situation. After all, there is such a large disconnect between the economy and individuals that what is good for the economy (debt-fueled consumer spending) is bad for individuals.

Perhaps instead of trying to preserve the current economic workings, we should be concentrating on transforming the economy into something that works better with individual finances.