Savings Accounts

As unemployment reaches double digits for the first time in over 26 years, savings accounts, once a standard for the grown up and responsible, are becoming more and more of a luxury item. The idea of a "rainy day" fund becomes increasingly far-fetched as many Americans struggle with the increasingly difficult task of having even "every day" funds. Washington recently announced the recession as being "officially over". This announcement makes for a great and hopeful headline, but what does this announcement really mean?

The economy, in the third quarter of 2009, rose 3.5%. Some believe this rise marks the official end of recession, while others are more cynical. Consumer spending did rise this quarter, but a large part of this spending was due to government-backed stimulus programs and spending, such as the "Cash for Clunkers" program and first time homebuyer's tax credit. These incentives may have generated more consumer spending than in the previous 4 quarters, but people are still facing harder economic times than ever.

Savings accounts, retirement funds, and nest eggs in general, have been depleted over the past year and a half. Over 115 banks have closed in 2009, and consumer credit is tighter than ever. Most people who own houses have watched their value drop dramatically, and the losses in the stock market are par for the course. The government may make dramatic announcements from the nation's capital, but on everyday main streets in America, "going out of business" and "for lease" signs abound.

The faith in banks has declined rapidly because of closures and increased credit card and other consumer fees. Banks are offering an interest rate under 2% APY, and this is for what's currently being considered as high yield savings accounts. For those people who have money left over each paycheck, savings accounts are sometimes the only choice due to worry about risks in the stock market. And with unemployment rising, and no indicators it's going to stop rising any time soon, people are wary about investing their money in something long term. The economy is still uncertain which makes the future uncertain. Quick and ready access to liquid assets is a necessity for most, but there is still a desire and need for people to have a stable place to earn money on their money. Consumer confidence will rise when banks offer people a return on their money that shows their own confidence. For now, sunny days sound nice and the forecast is good, but the memory of rainy days and the depletion of rainy day funds is the reality most of us are living with.