NEW YORK-Household savings rates are heading 'north of 10%,' in the face of continuing economic uncertainty, an executive of
In the past, 13% of households saved 7% or more of their disposable income, according to a presentation made to the
Now, surveying in the last 90 days shows a stark change, according to Crosby. Going forward, 36% of households are planning to save 7% or more of their disposable income.
A big driver: The reduction or disappearance of health and retirement benefits derived from employers.
Crosby called it "retirement uncertainty" and cited $8 trillion in unmet funding requirements for pension plans in North America. "You talk about a gap. It's a crater," he said.
Which means Americans are taking money out of the economy and putting it into savings, to protect themselves. "People who haven't given up are pouring money into a host of new vehicles,'' he said, from index funds to exchange-traded funds and alternatives.
Consumers are devoting their disposable income to paying down debt, from credit cards to auto loans, he said.
And the "double shock" of the Bernard Madoff Ponzi fraud and the credit crisis is not likely to wear off for a long time, he said.
Households won't be returning to buying speedboats and other frills, like they have after previous recessions.
"We think that's not going to happen,'' this time, he said.
