ATLANTA — Federal Reserve Board vice chairman Donald Kohn said yesterday that the increase in the U.S. savings rate since the financial crisis is apt to endure and help reduce the government’s current account deficit.
“This higher saving rate should prove reasonably durable as households seek to pay down debt and rebuild wealth,” Kohn said in remarks prepared for a Zurich conference sponsored by the Swiss National Bank and the International Monetary Fund.
On the other hand, business investment may outpace business profits and savings, working in the opposite direction, he said.
Kohn, who is retiring next month, said the U.S. must increase savings, rely less on debt-financed consumption, boost exports, and increase national savings by reducing deficit financing.
— Market News International