Thrift, savings making U.S. comeback

MINNEAPOLIS, July 5 (UPI) -- Thrift is making a comeback in the United States after Americans spent most of the past 15 years spending freely on borrowed money, statistics indicate.

Numbers released by the Federal Reserve and the U.S. Commerce Department showed consumer borrowing dipped by $15.7 billion in April, while the personal savings rate rose to 6.9 percent in May, the highest level since December 1993, The Star Tribune of Minneapolis reported Sunday.

Economists say job worries are behind the return to the values of contemporary Americans' grandparents, who rarely bought consumer goods on credit.

"The dramatic and speedy manner in which the economy has deteriorated has had some real shock value for consumers," Michael Houston, a marketing professor at the University of Minnesota's Carlson School of Management, told the newspaper. "In part, there's some contingency planning going on in the event they lose their jobs (or) are subject to pay cuts, furloughs and the like."

Some pundits say now isn't the time for Americans to cut back on spending, as 70 percent of the U.S. economy is dependent on consumer spending. However, Art Rolnick of the Federal Reserve Bank of Minneapolis disagrees, saying banks use savings to make loans.