Savings Glut

The self-serving explanation for America's bad habits.

By Daniel Gross
Posted Thursday, June 16, 2005, at 12:56 PM PT

Why are there imbalances in the global economy? Until recently, conventional economic wisdom has held that the U.S. has a huge trade deficit, a gaping current account deficit, and large federal budget deficits because Americans consume too much and save very little. Newly emerging conventional wisdom takes the opposite view. The problem in today's global economy is that the rest of the world, in particular people in Asia, consume too little and save way too much.