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Welcome to the Era of Squeeze

“Next time you find yourself staring at an empty savings account, feel free to blame the era you live in.

Middle-income households would havesaved roughly $1,400 more a year by 2005if their incomes had grown at the same rate as the top 10 percent of earners from 1980 to 2008, a new paper finds.

By comparing the income data of top-earning households with everyone except the poorest 10 percent, University of Chicago professors Marianne Bertrand and Adair Morse discovered that the growing levels of U.S. income inequality had caused about a 3 percent decrease in middle-income household savings by the mid-2000s. Altogether, the U.S. personal savings rate for all Americans declined from around 10 percent of disposable income in the early 1980s to just 1.5 percent in 2005, the researchers write….”

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