Saving more, consuming less…

We know that on average, Americans have – until the end of 2008 – been spending more than they were earning, running a personal budget deficit, thus effectively producing a negative rate of savings. Since that time, auto sales have ground down to being sixty percent of what they used to be and other retail activity has started to feel the pinch as well. Is the American public now on the mend and ready to seriously start saving? Perhaps, and frankly, that would be nice. The problem with that however is that our country GDP is likely to plunge as its inhabitants slow down their carefree consumption. Sure, economic activity is supposed to be boosted by general interest spending, mostly in infrastructure maintenance and creation, but how will that investment money flow from savings into our gross domestic product? Will Americans in effect, invest their saving into financing that huge debt our country is taking on? Is there any good economist out there capable of confirming that it will indeed be the case and that we might be looking at a zero-sum game as far as our GDP is concerned?