Americans today save on average less than 1% of their after-tax income, compared to 7% in the early 1990s. American citizens are saving less due to the higher cost of housing and interest rates. Many homeowners find that rising property values ​​allow them to make needed savings that they otherwise would have put aside. The housing boom, like the stock market boom before it, allowed Americans to save without having to reduce their consumption. As the value of their assets increases, people naturally feel wealthier. Consumer spending has held up, not because incomes have risen, but because consumers have taken on more debt, mainly by borrowing to cope with rapidly rising house prices. The marginal propensity to consume is affected by consumer confidence and interest rates because they affect the rate of return on savings. With fewer dollars available as savings to banks and other financial institutions, interest rates are higher for savers and borrowers than they otherwise would be. . This makes it more expensive to finance investments in factories, equipment and other assets, slowing GDP growth. The lower savings rate means a higher consumption rate, which stimulates more spending, more income, and therefore more spending, on its own. -feeding process known as the multiplier effect. People don't save for the sake of saving. They save to spread their consumption throughout their lives. The United States also has a consumer culture, with consumers always having to “keep up with the Joneses.” Children seem to be entitled to deserving possessions that other children possess. Since consumers will spend more instead of saving, the equilibrium GDP will not be balanced. Unemployment and inflation will occur because low investor spending does not compensate for low consumer savings. Our high-consumption, low-savings economy has only worked because our European and Asian allies have been willing to save and produce more than they consume..