Savers haven't had much to cheer for since the Great Recession began in late 2007 and the Fed responded with a series of rate cuts that's had the key federal funds rate near zero since late 2008. CD rates have steadily declined since then, eventually falling to the point where earning 1 percent on a one-year CD is the exception, rather than the rule.
At the White House Personal Finance Online Summit last week, Gene Sperling, Director of the National Economic Council, was asked about the administration's stance on the plight of U.S. savers. While he wouldn't give any specifics on monetary policy, which is within the purview of the Fed, he did say the following.
The first priority for our economy was obviously to prevent ourselves from spiraling into a potential depression in 2009. And then I think, as we faced headwinds in 2011, to make sure that we did not even take a significant risk of another downturn when we were already at 9 percent unemployment. And I think your first and fundamental goal has to make sure that you have a recovery that is solid and taking hold and moving in the right direction.
While many economists would probably agree with Sperling's priority list, it may be a bitter pill to swallow for the many savers who never participated in the spending and borrowing frenzy leading up to the financial crisis. They'll likely have to wait until economic growth reaches a healthier clip before the Fed moves to prevent inflation from rising to see CD rates return to something approaching normal.
What do you think? Are negligible returns for savers a necessary evil of the government's response to the financial crisis?