Alan Greenspan foresees a surge in the U.S. savings rate, which could be good news for the mutual fund industry, but the Federal Reserve chairman's prediction isn't finding a lot of support among other leading economists and academics, a Bloomberg news report suggests.
Speaking before the House Financial Services Committee on Feb. 7, Greenspan said the that national savings rate, which has sunk to a five-year low of about 1%, will soon rise as the national appetite for mortgage refinancing abates. Record-low home re-financing rates in recent years, which came on the heels of an equally stimulating stock market boom during the 1990s, fueled a spend-versus-save attitude among Americans. A closely watched report from the Office of Federal Housing Enterprise Oversight seems to support Greenspan's theory. The latest Ofheo index shows that housing prices rose 11% in the fourth quarter versus a year ago. That's the largest gain since 1979, the Bloomberg report reveals.