There has always been something of a fractured truth about the president’s role in the economy and wealth of the United States. Like a quarterback in the NFL, when things go right they get too much of the credit and when things go wrong they get too much of the blame. Because economic policies tend to lag most presidents spend their first term under the echoes of the previous president’s economic policies and not until their second term (if they get one) do you see potentially their own policies being felt. Never mind the impact that Congress also plays in setting economic rules and regulations, especially as it relates to the tax code. Lastly, the greatest wielder of any economy is the central bank or in this case the Federal Reserve. Unfortunately, we often force our perception to be reality.
In good times, Americans have notoriously under saved and conversely in bad times find it hard too save. Culturally, Americans have never been a country of savers. Some argue this has been a result more and more in recent generations of the societal safety nets in place that discourages savings behavior. There is some truth to this when you see countries in Asia where savings rates can be upwards of 30 percent arguably because there is no social security or government assistance of any sort if something were to happen. How a culture views debt and values possession can have an acute influence on households emphasis on savings.
So what exactly is the savings rate? Investopedia defines the savings rate as, “The amount of money, expressed as a percentage or ratio, that one deducts from his/her disposable personal income to set aside as a nest egg or for retirement. The cash accumulated is typically put into very low-risk investments (depending on various factors such as expected time until retirement), like a money market fund or a personal IRA comprised of non-aggressive mutual funds, stocks and bonds.” No president over the past 35 years has enjoyed a higher savings rate than Ronald Reagan at 12.7 percent and no president has enjoyed a lower savings rate than George W. Bush at 1.9 percent. Both, largely could be explained by the aforementioned Federal Reserve policy of interest rate movement. The Federal Reserve during Reagan’s tenure held interest rates in the healthy double digits, while the Federal Reserve during George W. Bush’s tenure in office were pushed toward near zero.
RONALD REAGAN (1/20/1981 – 1/20/1989)
Highest – 12.7% (November 1981)
Lowest – 3.8% (April 1987)
GEORGE H.W. BUSH (1/20/1989 – 1/20/1993)
Highest – 9.9% (December 1992)
BILL CLINTON (1/20/1993 – 1/20/2001)
Highest – 8.4% (December 1993)
Lowest – 3.5% (December 2000)
gEORGE w. BUSH (1/20/2001 – 1/20/2009)
Highest – 7.9% (May 2008)
Lowest – 1.9% (July 2005)
BARACK OBAMA (1/20/2009 – Present)
Highest – 10.5% (December 2012)
Lowest – 4.1% (December 2013)
Source: St. Louis Fed
Can you introduce me to a bank with a personal savings rate above 4%?
Thanks in advance.