Slowly, surely, the United States is again becoming a nation of savers. The country learned the value of saving the hard way after the Great Depression of the 1930s, but our financial habits have been on a long, slow decline since then. The contemporary recession is seeing many consumers finally making the smart decisions to cut up their credit cards, stop blowing money on frivolous expenses, and set some cash aside for a rainy day. The problem is that there are not many opportunities for these fledgling savers to get much of a return on their investments.
Yields on certificates of deposits have all but bottomed out, making consumers think twice about locking in rates. The average one-year CD in America right now has a rate of between half a percent and one and a half percent. Only a handful of banks anywhere are offering rates of two percent, and a single bank in the whole country – located in Midvale, Utah – is offering the comparatively princely sum of two point seventy-six percent. Compare that to rates hovering in the healthy fives during 2006 and early 2007, and you understand the catastrophe of saving at the present.
Yet, analysts insist that consumers should not get too obsessed about the abysmal rates. What really counts, they insist, is the comparative purchasing power of your cash. Those savers who were getting rates of five percent or better a few years ago have seen their returns get eaten up by inflation. Since inflation is more than likely going to stay low in coming months, those tiny percentage yield actually aren’t as horrific as they sound. I guess every cloud really does have a silver lining.
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