Should we be saving more? Is the US savings rate causing an economic crisis?

Answer 1

Our low savings rate, long term, is a concern for economic growth. To reverse this trend we'll need higher interest rates, unfortunately.

Answer 2

Certainly not an economic crisis. I'd like to see a simple question injected into all the panicky news about our low or negative savings rate -- " So what's wrong with a low savings rate?" And that's when we'd learn that all the journalists have absolutely no idea.

The stock answer BTW is that lack of savings reduces the pool of capital available to business investment, and so will be detrimental to productivity growth, which will hamper GDP growth and improved living standards. However for many years now the bad things that are supposed to happen as a result of low savings are NOT happening.

Far from it, our worst economic crisis of recent years resulted from their being much too much capital swarming around allowing businesses to massively overinvest (ie, the internet and broadband bubble).

At this point I'm not so sure it's even a problem and I'm doubting the traditional view about this. There is certainly no scarcity of capital available for business investment, and I think it's clear that business would actually DECREASE investment if individuals suddenly began spending less money (which necessarily happens when they save more).