Agree. It's almost impossible to determine the correlation, if it exists at all.
On your later point, ironically if everyone now decided to save more, this would not have a positive effect on the economy.
On your later point, ironically if everyone now decided to save more, this would not have a positive effect on the economy.
The second reason is the resulting taxpayer bailout of the financial institutions. The increase in taxes from all of these recent programs aimed at removing toxic assets from banks balance sheets, increasing liquidity in the credit markets, etc. haven't even hit taxpayers yet. Saving now enables people to react better financially when taxes rise later down the road. I don't think increased consumer spending (on credit) is as reliable a metric of the overall health of the economy as it was, because while the U.S. is a credit driven economy, using lots of credit and having any or little savings are one of those things that led us to where we are now.