02 January,2009 09:06 AM IST | | Agencies
Recession-wary Americans embraced the virtues of thrift this Christmas, with stores reporting a clear rise in the popularity of piggy banks.
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"We have been selling coin banks really well," said Laura Kellner at Kikkerland Design Inc in New York City.
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US savings levels have increased markedly in recent months, as households adjust to a yearlong recession and the worst financial crisis since the Great Depression.
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The downturn has shattered house prices and the value of retirement accounts which, in turn, has reinforced the necessity to systematically put funds aside for the future.
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Retailers said this translated neatly into a gift that captured the spirit of the times.
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"We definitely noticed a trend with the piggy banks," said Erin Mara at Homebody, a design store in the Capitol Hill neighborhood.
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"People were very upfront about the need to save... the pig is very symbolic of that sentiment," she said.
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Personal saving as a proportion of US disposable income rose to 2.8 per cent in November compared with zero back in April, but remain well below the 10 per cent range it occupied back in the early 1980s.
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In fact, the shift from consumption to saving will be a crucial factor in determining the pace of the country's economic recovery, which many economists see gradually taking shape in the second half of the year.
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If shock over the housing and stock market's losses sends the savings rate all the way back to the 11.2 per cent notched in 1982, after the United States had endured two painful back-to-back recessions, it will prolong the current downturn.
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That would also illustrate what the influential British economist John Maynard Keynes called the 'paradox of thrift'. This described how the personal virtue of saving for the future becomes a collective ill if everyone does it at the same time, causing domestic demand to collapse and hurting everyone's savings because this slows the entire economy.
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Judging by the sale of personal safes this season, people are not taking any chances.
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Amazon.com said that it had seen a major jump in demand for private safes, which may also reflect an erosion of confidence in the country's banks after the financial crisis led to several high-profile failures.
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