America in Hock

  • Share
  • Read Later
WASHINGTON: Americans continued to bravely fight off recession by pumping money into their faltering economy -- too bad they just ran out of cash. The national savings rate in September dipped into negative territory for the first time since 1959, to -0.2 percent. When personal spending jumps 0.5 percent but personal income is up only 0.2 percent, it's clear that America's tenacious economic expansion is living on borrowed time -- and money.

"We can't keep this up," says TIME senior economics reporter Bernard Baumohl. "Americans are spending every penny they have, and more." Coming soon: They take a deep breath and replenish their savings, almost certainly at the expense of that 3.3 percent GDP growth that gave everyone such a warm feeling last week. "We should see a sharp cutback in spending the next couple of months," says Baumohl. It couldn't come at a worse time -- will this be the crunch that stole Christmas?