Matthew Lynn: the return of Prudence

American consumers have suddenly started saving money - a trend that has the potential to re-shape the global economy, says Matthew Lynn.

In the US, the most interesting economic statistic right now is not the bullish stockmarket, the bottoming of the housing market, or the gradual emergence of the 'green shoots' of recovery. It is the savings ratio. American consumers, who for more than a decade were the shop-till-you-drop, maxed-out, credit-hungry motors of the global economy, have suddenly decided to start doing something their baby-boomer parents had probably forgotten all about, but which their grandparents might just dimly remember. Saving money.

Along with other over-indebted consumers around the world, they are putting aside a rising chunk of their monthly pay packet for a rainy day. That may turn into the most significant financial trend of the next five to ten years one that has the potential to re-shape the global economy. In the medium-term, it will no doubt be a good thing, but in the short-term it will cause a huge amount of disruption. There's no disputing the raw data.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.