Is negative personal saving a serious problem?

In most of 2005, personal saving was negative, attracting widespread attention and concern. Many analysts suggest that negative personal saving means that the typical U.S. consumer is living well beyond their means. Since this would be unsustainable, the fear is that an end of a consumer spending binge could lead to a recession. Such fears have taken on many incarnations over the past five years, focusing first on wealth declines due to the stock price crash in 2001, concern over foreigners’ appetite for U.S. assets and fear of its disappearance and, lately, a feared bursting of a suspected housing bubble that would lead to a surge in saving and decline in consumer spending. This article discusses how serious a problem negative personal saving could be.