The second quarter earnings season started just like the Fourth of July - with a bang!

The hard-hit financial sector delivered some good news last week as companies such as Goldman Sachs and JP Morgan Chase announced earnings that pleased the market. In the tech sector, Intel and IBM provided support, too. On the other hand, widely watched General Electric came out with earnings and guidance last Friday that was disappointing and the stock dropped 6% by the end of the day. The good news was that the big drop in GE stock did not take the rest of the market with it - perhaps a sign that investors don't view GE as the bellwether stock it once was.

By the end of the week, after all the news and noise, the S&P 500 index had surged 7% and had almost recaptured its recent June 12 high.

Going forward, investors will keep a close eye on the rest of the earnings reports looking for any sign that profits are being generated by revenue growth instead of relying on cost cutting. As you know, you can't cost cut your way to 15% profit growth each year, so, eventually, we'll need to see solid revenue growth before investors will feel confident that we're out of the woods.

Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  N/A means not available.

Americans socked away money at the highest monthly rate in 15 years last month, according to the Department of Commerce, and that's good news - mostly. The personal savings rate rose to 6.9% in June, which is well above the average savings rate over the past decade. The personal savings rate is the percentage of personal disposable income that is saved each month.

A higher savings rate may reduce our dependence on foreign countries financing our deficits - a good thing - but, paradoxically, it might lengthen our recession. If we collectively save "too much" it could stunt economic growth as consumption slows down and fewer goods and services are produced and delivered. This "paradox of thrift" may hurt the economy in the short-term, but could be very beneficial in the long run. A higher savings rate also helps cushion families against unforeseen financial setbacks like the loss of a job, so that's good, too.

To put the 6.9% in context, here's how the number looks over roughly the past 50 years:

 Source: U.S. Department of Commerce: Bureau of Economic Analysis

Notice that from the 1960s through the 1980s, the personal savings rate averaged a healthy 8.3% to 9.6%. During the 1990s, there was a noticeable decline in the savings rate as consumers started a nearly 20-year spending binge. As we started the new millennium and all the way up to September of last year, consumers were on a spending rampage as they not only burned through their income each month, but, in some cases, borrowed money to support their habits.

In August 2005, near the peak of the housing bubble, the personal savings rate was actually a negative 2.7%. This amazing financial alchemy was aided and abetted by consumers pulling out billions of dollars in home equity loans and using that money to finance an unsustainable lifestyle. Of course, this spending above our means also meant that the level of economic growth was unsustainable, too. This all abruptly shifted in August 2008 as the personal savings rate went from 0.8% that month to last month's 6.9%.

Yes, it is generally a good thing that consumers are saving again. The big question is, have we learned our lesson? Is this new frugalness just temporary or is it the new normal? The answer to that question has major implications for the worldwide economy over the coming years.