dkf
dkf's JournalWorried Consumers Save, Don't Spend
Americans are earning more money—but socking it away and not spending, undermining hopes for a consumer-driven rebound.
The personal saving rate, which measures savings as a percentage of disposable income, jumped to 4.4% in June from 4% a month earlier and a recent low of 3.2% in November, the government said Tuesday, as consumers squirreled away cash amid the weak economy.
Spending on everything from vacations to clothes was largely flat in June. Spending fell less than 0.1%, after easing 0.1% in May, even though Americans' income after taxes rose 0.4%, the most since March. Consumer spending is the biggest single driver of the U.S. economy, accounting for roughly two-thirds of demand.
The pickup in saving is a two-edged sword for the economy. In the long run, saving helps Americans establish a cushion against financial setbacks and build up wealth that can fuel spending. It also helps them cope with rising gasoline and food prices. But penny-pinching sucks life out of the economy, which relies heavily on consumer spending and faces a dimming outlook as other drivers of growth lose steam.
http://online.wsj.com/article/SB10000872396390444226904577560753932367334.html
FHFA Rejects Request for Mortgage Debt Writedowns
Fannie Mae (FNMA) and Freddie Mac won’t forgive principal on delinquent mortgages they guarantee even as the U.S. Treasury Department is offering incentive payments for writedowns, the companies’ regulator said today.
Months of analysis showed there would be no clear benefit to taxpayers if the Federal Housing Finance Agency were to change its longstanding policy barring the government-owned mortgage-finance companies from loan modifications that include debt writedowns, Edward J. DeMarco, the agency’s acting director, said today said at a briefing with reporters.
“We concluded the potential benefit was too small and uncertain relative to unknown costs and risks,” DeMarco said.
The decision comes after months of mounting pressure to reverse the policy from activist groups and congressional Democrats, who touted it as a way to keep more families from losing their homes to foreclosure. FHFA has been in discussions since January with Treasury officials, who offered Fannie Mae and Freddie Mac (FMCC) as much as 63 cents for each dollar of principal reduction, using unspent funds from the Troubled Asset Relief Program.
http://mobile.businessweek.com/news/2012-07-31/fhfa-rejects-u-dot-s-dot-treasury-request-for-mortgage-debt-writedowns
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