Alan's Lament: Where Have All the Savings Gone?

Carefree shoppers have no greater nemesis than Alan Greenspan. The relentless Federal Reserve chairman has been tweaking our collective guilt for months now, urging us not to stake our fortunes on the mercurial stock market and reminding us that our security depends on prudent savings plans. And now Greenspan will have additional ammunition for his attack on spendthrifts: According to new government reports, U.S. consumer spending outpaced personal income in February, and savings dipped to a record low.

"These are exactly the numbers Greenspan is worried about," says TIME financial writer Daniel Kadlec. "He's worried that people will see their money performing well in the stock market and feel rich — and then they'll go spend what they don't actually have." Granted, spending against paper profits that may disappear with the next NASDAQ nosedive isn't exactly the stuff of sound personal finance, but will American investors' apparent flush of success be enough to spur the Fed chief into do something drastic — like once again raising interest rates? Count on it, says Kadlec. "Consumer spending indices hold a lot of weight with Greenspan," he explains. "As long as we see numbers like these, there's no relief in sight from incrementally rising interest rates." Once we've accepted the water torture-like inevitability of quarter-percent increases, American investors are still left with one nagging question: How far will the rates have to go before Greenspan can finally relax?