Jul. 5--When did saving money become a bad thing?

For a long time, up until little more than a year ago, leading economists and other worrywarts were constantly chiding Americans for our failure to save money.

We were just a bunch of profligate wastrels, they said, spending every dime we made and more on SUVs and flat-screen TVs. We'd abandoned our traditional Yankee/Puritan values, or at least the one about thrift. "A penny saved is a penny earned" had become "A penny earned is a penny spent."

We were the world's worst savers, a nation of grasshoppers in a global economy dominated by sensible ants.

Well, now we've started saving again and it's causing all kind of problems.

Indeed, America's personal savings rate (disposable income minus spending), which was as high as 10 percent in 1980, eroded away to minus .05 percent in 2005. Only two times before, in 1932 and 1933, had the savings rate, which is published monthly, been negative for an entire year.

Of course negative savings rates were understandable in 1932 and 1933 because Americans were forced to spend every nickel they could scrape together just to provide food and shelter.

As the nation was recovering from the Great Depression, World War II began to dominate the economy and people began saving again. That, too, was understandable: People were worried that the recovery wouldn't last; they were encouraged by the government to buy savings bonds and stamps to pay for the war, and factories were mostly turning out

tanks and guns, not consumer goods.

Post-war, however, the saving stopped and Americans, exercising their pent-up demand, began spending with a fury on houses, cars and refrigerators. The downward trend in the savings rate, except for a few upticks, continued until recently, causing economists to fret that Americans were not putting away anything for retirement, relying instead on the government, specifically Social Security, to take care of us in our golden years.

Now we're in the middle of the worst economic collapse since the Great Depression and once again people are in the mood to save, not spend. And it is saving, not spending, that we're getting bawled out for.

In 2008, President George W. Bush and Congress enacted income tax rebates -- $300 for most single filers and $600 for joint filers -- that were intended to stimulate the worsening economy. The idea was that we would cash our rebate checks and immediately spend our collective billions on burgers, fries and iPods.

We didn't do that. Instead of rushing off to McDonald's or Circuit City, we stuck the money in the bank or paid down our credit card debt. The economy didn't get stimulated. The only thing that got stimulated was the wagging fingers of the economists.

Then last week the Commerce Department announced that the personal savings rate, which was around zero in early 2008 (before those rebate checks arrived in the mail), increased to 6.9 percent for May, up from 5.6 percent in April.

You might think that was good news, given our Yankee/Puritan values and all. But all the announcement did was cause the stock market to tumble 55 points, further delaying the economic recovery. Bad consumers, saving instead of spending.

Let's get this straight. We're supposed to save in good times and spend in bad times, right? Or is it the other way around? And how can we spend if we don't have any disposable income and we've already frittered away our rebate checks by paying down our credit card debt?

David Averill 581-8333 david.averill@tulsaworld.com

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