What is the overall impact of increased savings? Since more people are saving because of uncertainty, even those who are not having financial problems. What does that do to our economy?

Saving is imperative and for decades, Americans did not save enough. Now that the tide has turned and people are saving more there is a battle between the people who save and those who are financially fit but more tightfisted with their cash. Americans are spending less. This of course also includes those who are out of work and not contributing to the economy in tangible ways – other than for food or gas. People who are not nervous about their jobs or incomes are still cautious about their spending.

This is what makes me worry. Saving when you do not necessarily need to or saving more than you need to can make someone into a miser. Then someone who suddenly sees that they aren’t saving for a goal or for a good reason, could snap and then spend recklessly.

“It will likely be a difficult quarter for consumer spending because consumers are still very nervous about their jobs,” said Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania. “They’re going to be very cautious in their spending until there’s concrete evidence the recovery has really taken hold.”

The recession is taking hold in other countries as well. Canada’s GDP has fallen by over 5%, retail sales in Hong Kong are down 4%, European governments are rethinking their employment schema in order to have more workers.

There is no easy solution to this problem, but no extreme will make our financial problem improve. Reckless spending created this problem, stockpiling and not spending will not end this problem. A happy medium of spending within reason needs to be reached. Reasonable spending differs for each person, yet spending nothing when you have money to spend is also foolish and deprives yourself of what you may truly need (or want).