NEW YORK
The U.S. is finally becoming a nation of savers. Now if only we could get something for our money.
Interest rates are sinking to near zero for the first time since last year's financial meltdown, dampening spending as Americans earn less on their bank deposits and investment accounts.
It's hardly encouraging news for an economy that sorely needs people to buy things.
Rates are falling to near zero this time because of prudence, not panic. Financial firms are polishing up their balance sheets at the end of the year by buying government debt, a much safer investment than most others.
The dive in interest rates comes as Americans sock away more money. Today's personal savings rate of 3 percent is nearly double that of a year ago.
Yet all that saving isn't exactly paying off. Personal income from interest hit $1.26 trillion in 2007, according to the Bureau of Economic Analysis. This year, that number is on track to fall by $40 billion -- even though people are saving more.
The bureau says that interest income fell 7.4 percent each month for the past three months. People who rely on interest from savings, such as money in certificates of deposit, are earning less.
Retirees, among others, depend on interest income. The more it shrinks, the less they have to go shopping, dine out or take vacations.
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