One of the hallmarks of a recession is also a reduction in consumption.
To iterate on that point, if people decided not to buy the latest and greatest phone, you would assume that in a growing economy they'll use the new available income to buy something else.
So then more people are saving more money. Isnt that a good thing? After all, someone else just noted that 60% of the US population has less than $1000 in savings. which is a pitiful amount.
What do we want them to do? Spend more to keep the economy going or save more so they dont live paycheck to paycheck? Seems like we cant have it both ways.
Sometimes it is, sometimes it isn't. Too much saving can cause economies to collapse just as too much spending (and debt) can.
It also depends on what you do with that saving. If you keep it under your mattress than it's as a whole bad for the economy since money (and hence value) is taken out of circulation.
But even if you invest that money than it might not be good for the economy.
In theory, if there is less consumption then there are less things that are being sold. That means companies make less profit, which in turn means investments yield less value. If enough consumption is reduced, saving could even result in negative value (I.E. you lose money).
In fact during a depression it is common for governments to artificially increase consumption to boost the economy (whether by public works or reducing interest rates).
Of course those are extremes. In reality less consumption could turn into a better and perhaps more equal economy or it could turn into a vicious cycle and a depression.
Historically speaking though, reduced consumption is usually a precursor to reduced economical growth and accompanies a depression and not the opposite.
Ok that is a theory. But again I am asking: should more people be spending more instead of saving more? Given more than 60% of americans have less than $1000 in savings.
you're asking the wrong question. If you die, then it doesn't matter how much money you have. The problem is living.
If you're living and you have No money, then it really really sucks (at least in the current day, the way everything is made you can't do anything without money, can't even have a home and live in peace without money)
It is not a given. Numbers differ depending on what you count as savings. Closest to your estimate is "29% of households have less than $1,000 saved."[1]
To iterate on that point, if people decided not to buy the latest and greatest phone, you would assume that in a growing economy they'll use the new available income to buy something else.