Household saving rates are falling globally

We recently wrote about the UK household savings ratio falling to a record low of 4.9% in 2017 (since comparable records began in 1963) as growth in households’ spending exceeded the growth of households’ income. (Read more here).

Households saving ratio, seasonally adjusted
UK Household Saving Rate, Source: Office for National Statistics

We also wrote about the household savings rate in the US falling to a multi-year low of 3.1% as household expenditure grew quicker than income (Read more here).

US Personal Saving Rate February 2018
US Personal Saving Rate, Source: U.S. Bureau of Economic Analysis

And it appears the same is happening in Australia and Canada as well.

Australia Saving Ratio, Source: Reserve Bank of Australia
Australia Saving Ratio, Source: Reserve Bank of Australia
Canada Household Savings Ratio
Canada Household Savings Ratio, Underlying data source: Government of Canada Statistics

Spending is outpacing income, household debt is at an all time high and interest rates are at an all-time low. What would happen if interest rates were to rise significantly or if the economic conditions like record unemployment to reverse?

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