As the recent financial crisis unfolded, I kept coming back to two questions that seemed central to understanding the way consumers and small businesses might respond to changes in their own circumstances during the crisis and, importantly, how their attitudes toward spending and investing might change going forward. The first question had to do with the relationship between household wealth and the saving rate.
And as a baby boomer myself, I wondered whether the relationship between wealth and savings might be especially important as the baby boomers faced a change in wealth just as most were planning to retire. So I am going to talk first about how changes in wealth impacted the spending plans and risk tolerance of consumers closest to retirement.