Yellen Says US Families Need to Boost Savings

[Newsjock]

Source: Associated Press

The Great Recession showed that a large number of American families are "extraordinarily vulnerable" to financial setbacks because they have few assets to fall back on, Federal Reserve Chair Janet Yellen said Thursday

Yellen said a Fed survey found that an unexpected expense of just $400 would force the majority of American families to borrow money, sell something or simply not pay.

... She said the bottom fifth of households by income — about 25 million households — had median net worth in 2013 of just $6,400, and many of these families had nothing saved or negative net worth, meaning their debts were greater than their assets.

Yellen said that the Fed's 2013 Survey of Consumer Finances, an in-depth analysis of family wealth, found that the next one-fifth of households had a net worth of only $27,900 in 2013 and that both of the bottom two-fifths of households had seen declines in net worth since the Fed's last survey in 2010. She said one reason for this decline was that incomes for these families had continued to decline.

Read more: http://abcnews.go.com/Business/wireStory/yellen-us-families-boost-savings-25589956

[unblock]

1. ohhhh! and here i was, thinking i was doing the right thing by racking up debt and pissing it away.

[msongs]

2. "you riff raff need to spend less on food and housing so my wealthy friends can have more" nt

[FiveGoodMen]

5. That's really the only song they sing in DC.

[jamzrockz]

18. Christ

Is not like the corporations do not run agribusiness too. If you going to criticize, at least make sure it makes some sense. I have a feeling you will be saying the opposite had she come out and said we should spend more on food.

[Warpy]

3. Yeah? Then increase wages and bump up the interest rate

so that people aren't losing money hand over fist due to inflation.

Yellen is as big an ignoramus as her predecessors, I do believe.

[dixiegrrrrl]

7. Uh..we DID boost savings....

Back when we told to have IRAs and other retirement plans.
which made fund managers very very happy since they got to "manage" our captive money.

And what happened?
Just as we were reaching retirement age, we lost half of our savings to the dot com bubble
followed 8 years later by the housing bubble and the Great Treasury Rio Off of taxpayers.

gimme some of that 700 billion back that Paulson and Geitner stole, and I will have my "cushion" back.

[politicat]

31. +100! Nt

[Sherman A1]

4. Pardon me for a moment

Before I say something......

[LoisB]

22. Totally with you on this one.

[IkeRepublican]

6. I'm so sick and tired of this shit

They're always talking about what needs to be done, then quietly assuring what it takes to follow their suggestions is more difficult for working people.

Go f*** yourself, Janet.

[840high]

42. ...^ that

[ForgoTheConsequence]

8. Great advice Janet!

I'll just buy a few less cans of black beans and tuna this week.



The disconnect is incredible.

[christx30]

24. She's not listening.

She and her friends don't have to worry about those things. They are the type that can jet off to a boxing match in Vegas, just because. They don't worry if they can pad out their meals and their kids' bag lunches until their paychecks come through.
We need to get more industry back to the US. We need to get good manufacturing jobs back, and less of the low paying "service jobs".

[rogerashton]

10. In defense of Yellen

(Fair disclosure: like Yellen, I am an economist.)

The AP headline is deceptive. Yellen is describing WHAT IS -- not saying what people ought to do. It is a fact that about half of American families just have nothing to fall back on, and are vulnerable to setbacks from unexpected expenses of almost any size. THAT IS A PROBLEM and we ought to give Janet Yellen props for focusing on the problem, since, frankly, too many of my colleagues in economics do not see it as a problem nor even as a reality. I want to say that Janet Yellen is one of the good guys, except -- well -- she isn't exactly a guy.

Put the blame where it belongs: on ABCNEWS.

[Demeter]

32. The problem is starvation wages and no respect for working people.

No respect for those unable to find or hold a job, either.

No, Yellen is not getting off this hook she hung herself on.

[rogerashton]

34. Baloney

Yellen knows what the problem is. Some have, most have not. If Democrats won't give Janet her props, we just get another Greenspan. Get real.

[Demeter]

35. Listen buddy

I'm making $10/ hour at one gig, $8.50 at another/ and quitting the most lucrative (a paper route) because last winter nearly killed me.

I have a totally disabled child and she has a total asshole father.

It doesn't get much realer than that.

[Skittles]

40. you know it, Demeter

yes indeed

[joshcryer]

47. What power does Yellen have to help you?

[joshcryer]

48. Yellen was a transition pick, and she's right.

The vice chair of the Fed is a Keynesian. All we have to do is elect a Democratic President next go around and the Fed head will be Fischer.

Of course if we lose the Presidency... well, good luck with that.

[joshcryer]

46. That's what she said!

[dixiegrrrrl]

37. She wants to focus on the problem? Good!

Then she can start by doing what Congress mandated the Fed. to do:
Provide for maximum employment, stable prices, and moderate long-term interest rates.
instead of protecting the big banks against the consequences of their greedy actions by keeping interest rates artificially low.

[sendero]

41. Stop Making Sense..

.... because it does no good.

Make ZERO mistake folks, the Fed is knee deep in culpability for the current state of our economy.

[joshcryer]

49. How has it hurt employment, prices, and interest rates?

How does raising interest rates help prices and employment? It's a balance. And we're still coming out of a very bad recession.

The Fed is having to deal with a do-nothing congress and is merely keeping things balanced until actual reforms can be done. They have no power beyond that. Raise those interests rates and you put millions out of jobs.

[rogerashton]

52. Her power is limited.

What she can do to provide for maximum employment and stable prices is to keep interest rates "artificially low." She is doing that. If you want "moderate long-term interest rates," understand that that will mean less employment and might mean deflation -- which in turn would lead to more bankruptcies and probably still less unemployment.

This is what evidence and experience tell us. Religious devotees of Austrian economics will tell us that the Fed is the problem. Sometimes in the past it has been. Under Yellen the fed is doing what the law and the facts of the case permit. To demand more is wishful thinking and is destructive of progressive objectives.

[upaloopa]

11. The plan is to not let the peons have any wealth thus

they have no power. As income inequality grows those with no power do as they are told. Work harder to grow the wealth of the 1%.

[No Vested Interest]

12. Those who have jobs or retired need to live beneath our incomes, as far as

possible. at least 10% of income should be saved - 15 -20% is better. An emergency fund of 6-8 months is ideal in the current economy.

Big fan of Suzi Orman here - I've learned so much from watching her programs on Sat. night.
I also listen to Dave Ramsey's financial advice when in the car, though I don't care for his political stance.

Having little to no debt is the ideal - not easy when paying a mortgage and raising child/children.
The fact is we really don't need the latest toy, the newest car.
The peace of mind of not being burdened by the weight of debt is well worth it.
We don't have to follow the crowd.

[Boomerproud]

29. All of my debt is from paying off medical bills from surgery last year.

Vacation-haven't been on a trip since 2000. Work a temp job since being laid off in 2011. Work 10 hour days w/no time off.
Car-2007 Ford Focus
New clothes-ummm, don't think so.

Any other suggestions?

[No Vested Interest]

36. Medical bills have been the largest single cause of bankrupcies.

I sympathize with your plight.

That's why I'm so in favor of the ACA, and feel for those in states where Republican governors and legislatures have refused to implement additions to Medicaid.

Although I have Medicare and supplement, my daughter has gotten financial relief from exorbitant insurance costs through the ACA.
Son, until this year, had only catastrophic medical insurance.
He had gall bladder trouble - ER, overnight stay, expensive tests- in Dec, and had to swallow the huge deductible.
However, based on that he got silver plan insurance beginning last January, and, when gall bladder struck again, in Feb., he was better prepared re insurance to cover the cost of the surgery, tests, etc., he incurred.

Unfortunately, once stricken, as you have been, you can only start where you are.
Many on DU are in your shoes.
That's not reason, however, to warn those who are spending large on personal technology and other entertainment, and perhaps those who have had huge problems will agree.

[Brigid]

13. We gotta have something left to save first.

[Delphinus]

50. Thank you.

I think your answer is the most succinct I've seen.

[Doc Holliday]

14. This would be informative

if it were actually news. For the last thirty-something years, the PTB have geared our economy for spending, not saving. Readily available credit, ridiculously low interest rates for saving accounts, the plethora of low-interest loans available to anyone-- the traditional savings mentality has been evicted and replaced with "spend, spend, spend!"

I know I'm an old fart, but I remember when it was actually rather hard to get a credit card.

[mimi85]

17. We couldn't even get a Sears CC

until we bought our first house. I guess the more you owe, the easier it is. Or was. I still don't have (or want) a Sears card. Got too many CCs as it is. I figure you never know when you might end up in a spot where you need one. So far, so good. Paid in full every month AND have 6 months savings. And we are so far from bucks up. My husband is a bit of a cheapskate - which actually has turned out well.

[No Vested Interest]

19. Cheapskate? I prefer to say frugal. nt

[mimi85]

45. So true.

But then you aren't married to him.

[ebbie15644]

15. Dah!

[hobbit709]

16. Yellen needs to cut her pay to $9/hr and let us know how much she's able to save.

[cactusfractal]

20. Oh, let me get right on that...

And here I was spending all that money on stupid things like food, insurance and gas when I should've been saving it instead.

[rury]

21. WTF??!! How can you "save" when all of your money is spent on essentials...

you know, things like rent, car payments, auto insurance, food and utilities??
Increase people's WAGES and then we can SAVE!!

[LoisB]

23. I read it:

"She said that the Fed wanted to promote efforts to encourage families to take small steps that could over time lead to the accumulation of assets."

What would those small steps be is what I would like to know. They can "encourage" all they want but if your entire paycheck or social security check goes to pay for mortgage or rent, food, transportation all the encouragement in the world won't make a difference.

[YOHABLO]

25. These people that we put into such power are soooooo out of touch with the reality of the middle.

"She said one reason for this decline was that incomes for these families had continued to decline." Duh !! Janet L. Yellen reported investments worth at least $4.8 million in 2012, making her one of the wealthiest members of the Federal Reserve’s board of governors. Her husband is worth somewhere around 13 million.

[FiveGoodMen]

26. Whoever appointed her should have done a better job.

[Boomerproud]

27. Declining income=declining savings?

NOOOOO! What economics degree did she get?

[Nye Bevan]

28. Except that she did not say that. Read the transcript before expressing outrage (nt)

[YOHABLO]

30. Look dude, this is what was quoted by ABC news .. I see no transcripts .. so WTF?

[spooky3]

44. I read the ABC article and I saw no such quote. It appears that ABC made up the headline.

She didn't say anything like that. All the quotes were simply explaining the straits the bottom 2/5ths were in and stating she was concerned about low wage growth.

It looks to me as if they are putting "blame the victim" words in her mouth.

[Zorra]

33. Not a problem! We can just click the heels of our Ruby Slippers together three times,

and say, "I will be able to save more money, I will be able to save more money, I will be able to save more money..." and our bank accounts will magically overflow with enough cash to live forever on.

So just chill out kids, I got this!

[GeorgeGist]

38. US rich need to stop hoarding.

[Marthe48]

39. Let them eat cake!

No matter if Janet Yellen is shining a light on the plight of the poor, or if she is essentially clueless--the country can't sustain the charade that the economy is good for everyone. If you can't keep a roof over your head, or feed your kids, frustration will turn into anger and anger into revolution. Right now, the rich think arming cops will protect them and their interests, but there are too many poor with no safety net. We aren't teaching history in school very well, so we are reliving the the Dark Ages, the Gilded Age and all the other times when the rich got too greedy. Awhile back, somebody on Du said something about the fact that Social Security is social security, something that the rich and powerful need to remember.

[november3rd]

43. What's the Point of Saving?

Interest rates are so low, most of the major banks pay less than 1% interest on ordinary consumer savings accounts.

http://www.money-rates.com/savings.htm

You lose money by putting your savings there, because every other investment pays higher rates.

[Half-Century Man]

51. The little money I get goes to support my addictions and those of my masters.

I am addicted to roofs, hot water, and food. Those I am enslaved to are addicted to money and control.