The recession hit markets in the USA has forced a large number of citizens to us their savings. Howver, this has only led to a greater chaos in terms of the economic status.
Merely four years post the advent of recession in United States, the citizens of the State seem have started living off on their savings, help themselves through the phase of not so sturdy economic recovery.
Trends like borrowing from retirements funds and opting out of college funds are on a high. The recent increase in the usage of credit cards also worries many policy makers. This dependency on credit cards may be pointing out towards the fact that now even to meet their daily needs people have to take out new debts. Since the recession struck world’s strongest economy in December 2007, the average savings of Americans has reached to its lowest levels- from 5.1 % a year ago to 3.5 % in November.
The US economy might have shown some signs of recovery in mid-2009 but many believe that the future has more of darkness. It has been estimated that the growth this year will not be more than 2.0 per cent.
Moreover, some big risks like the declining finances of Americans, high rate of unemployment and Europe’s debt crisis seem to hover like dark clouds over the US economy.
Sales in US are not doing any good too. In December, retail sales recorded a seven month low. It is estimated that in 2012 the sales will grow at a rate of 3.4 % this year as compared to the 4.7 per cent last year.
Americans are now borrowing against their 401(k) retirement savings just like they used to take loans against their real estate properties. Another pitiable fact that explains the situation of an average American is that many people above the age of 50 are either missing appointments with doctors or changing their prescriptions to save money. Even the amount kept aside for children’s education has not been spared. Furthermore, the amount borrowed by college students has also doubled in the last decade. It has also been noticed that about 28 % of American people are unable to pay their monthly bills on time.
Americans are striving hard to pay off all their debts including the mortgages. And it shows as the credit card balances have gone down 18 per cent in comparison to the highest in September 2008. To help the US government to combat this situation, the Federal Reserve has suggested an array of ways, one of them being the revival of the housing market which seems to be the only ray of hope at this point of time.