Tuesday 10 December 2019

Low-interest savings account a negative for cruise sales

Low-interest savings account a negative for cruise sales


Image result for cruise savings plan
Amid all the positive signs for cruise growth going into 2020, one thing that remains troubling is the continued low return for savings.
Interest rates continue to be anaemic by historical standards, which should give pause to an industry still dependent to a great degree on seniors.
Unemployment is low, home sales are healthy, inflation subdued, the stock market at record highs. All of those things bode well for cruise sales. But anybody on a fixed income hasn't gotten a raise for quite a while.
I wrote about this seven years ago, and remarkably little has changed. Yields on the benchmark 10-year Treasury note closed 2012 at 1.76%, and as I write this the yield on the 10-year is currently 1.79%. For savers, it takes a nice sum in the bank or in CDs to be able to afford a cruise on that kind of return.
Interest rates did move up above 3% for a good part of 2018 as the Federal Reserve tried to wean the economy off of artificially low money rates that have been in place since the 2008-09 recession.
But it was forced to back off because of weak economies in Europe. Interest rates in Germany and some other European countries are now negative, which explains why Aida and Costa Cruises have had such a lousy year.

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