Consumers cutting back
As the value of homes and stock holdings plummeted and the number of jobless skyrocketed, people started paying down debt and boosting their savings.
"They're hesitant to take on added debt because of the uncertainty in jobs and future incomes," said Ryan Sweet, senior economist at Moody's Economy.com.
Household debt declined for a record four quarters, according to the Federal Reserves' Flow of Funds report. Meanwhile, the savings rate has climbed from an anemic 0.8% to 3.3%.
One reason why so many Americans have been hurt by this economic downturn is because they entered it in such a weak financial position. Many are struggling to get their financial houses in order.
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