APPLETON, Wis.-The personal savings rate has jumped significantly as the recession deepens and unemployment soars, but with consumer spending making up nearly 70% of the nation's GDP, the spending pullback is causing a negative feedback loop.
"I think it's one of the biggest dichotomies in our time," observed Cathy Tierney, CEO of Community First Credit Union. "We need people to save more, but what fuels the economy is spending, and when you're a credit union that's a difficult place to be because we want to encourage people to save."
Recently Tierney attended a presentation where the presenter argued that Americans will go right back to their old ways when the economy recovers. But the chief executive of the $1.17 billion institution hopes the country's addiction to consumerism is over.
And Community First is doing more than just wishing Americans choose a different path, it's helping the next generation learn that there does not have to be a choice between economic growth and a strong savings rate. "We're huge participants in financial literacy as many credit unions are. We helped our school district that says kids can't graduate from high school without taking a one semester course in personal financial management that we helped to write," Tierney noted.
