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U.S. And U.K.: Opposite Data, Same Conclusion!

Rob Marstrand profile picture
Rob Marstrand

When an economy gets into trouble, do people save more or save less? Recent and opposite data in the US and UK has been used to arrive at the same conclusion about their economies. It's a reminder that single data points should be treated with caution.

After Donald Trump was elected US president late last year, a lot of people got excited. He was going to slash taxes and boost spending on infrastructure. The economy would boom and life would be good.

A little over half a year later and things don't appear to be going to plan. Washington is bogged down in tribal, childish mudslinging over who once spoke to which Russian, or not. The mainstream media is increasingly (further) discredited. Meanwhile, the president seems to spend more time on social media than attempting to run the country or negotiate with others around the world.

After the election, Trump supporters were optimistic. They got spending. Personal savings rates - which measure savings as a percentage of disposable income - went down sharply. Now, as doubts creep in, savings rates are going up again. This is clear from the following chart:

This had been interpreted to mean the economy is going to struggle. If Americans are saving more, then they're spending less. And it's all about consumption.

Meanwhile, on the other side of the Atlantic Ocean...

There's plenty of political drama in the United Kingdom as well. In recent years, the supposedly calm British have lurched from one political drama to another.

As of now the government, led by Prime Minister Theresa May, is hanging by a thread after a disastrous general election campaign. There's talk of yet another challenge to the leadership of the Conservative Party, which could unseat May. Meanwhile, there are loud calls from some for another general election.

This article was written by

Rob Marstrand profile picture
I’m Rob Marstrand, the founder of OfWealth. I publish investment newsletters for private investors, always written in clear, non-technical language. I spent 15 years at UBS Group, the global investment bank, based in London, Zurich and Hong Kong. Then, for five years, I was Chief Investment Strategist at the US-based Bonner & Partners Family Office. Now I live in Buenos Aires, Argentina. Given its chaotic history, Argentina is the perfect place to learn how to survive and thrive in times of crisis.

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