Americans hoarding cash and payng down debt: Since 2007, savings rate has ballooned from 2 percent to 6 percent

The logic of the economic recovery isn't working -- or, at any rate, not well. By that logic, over-borrowed Americans would repay loans and replenish depleted savings, creating a temporary drop in consumer spending and economic activity. But once savings increased and debt declined, consumer buying would strengthen. It would replace the Obama stimulus program. Hiring would improve; the recovery would become self-sustaining.

We're still waiting. Just last week, economic growth for the second quarter was revised down to a meager 1.6 percent annual rate.

Why is the recovery faltering? There are many explanations: a depressed housing market; weaker-than-expected exports; cautious corporations. But consumers, representing 70 percent of the economy's $14.5 trillion of spending, are the crux of the matter.

It isn't that Americans aren't behaving as anticipated. They may actually be outperforming. "Consumers are deleveraging (reducing debt) . . . and rebuilding saving faster than expected," writes economist Richard Berner of Morgan Stanley. In 2007, the personal savings rate (the share of after-tax income devoted to saving) was 2 percent. Now it's about 6 percent. Temporarily, this hurts buying. Declines in consumer spending in 2008 and 2009 were the first back-to-back annual drops since the 1930s. Since World War II, annual consumption spending had fallen only twice (1974 and 1980).