In today’s Wall Street Journal, there was an article about how the increase in personal savings rates may end up slowing the economic recovery.

Economists are expecting a combination of falling income and higher spending (due to increased costs of gas, etc) to drop savings in the current month, however the overall trend is an increase in personal savings rates.

The general drop in net worth, currently the lowest since 1992, is pushing up the savings rates. Currently, the net worth numbers align with savings rates somewhere between 6% and 10%.

Just how does this impact the economy?

Well a 6% savings rate equates to about $700 billion that doesn’t go into the economy. 10% would exclude $1.2 trillion.

Funny how things change, huh? I remember a time, not too long ago, when the topic used to be how pathetic the savings rates were.

At the end of 2008 I posted about a few predictions/goals that I had for 2009. Well I just wanted to give a quick update that I have reached my goal of saving $1000 in an emergency fund before June of this year.

As mentioned in the title of this post, I’m seeing this as a mini goal because a $1000 emergency fund in this economy/job market is still pretty pathetic. So I’m going to continue my savings pace and by June I should reach the $1600 mark.

Nice to have a tiny bit of breathing room though…even if it’s just a tiny bit.