NEW YORK — The U.S. is finally becoming a nation of savers. Now if only we could get something for our money.

Interest rates are sinking to near zero for the first time since last year's financial meltdown, dampening spending as Americans earn less on their bank deposits and investment accounts.

It's hardly encouraging news for an economy that sorely needs people to buy things.

Rates are falling near zero this time because of prudence, not panic. Financial firms are polishing up their balance sheets at the end of the year by buying government debt, a much safer investment than most others.

The dive in interest rates comes as Americans sock away more money. Today's personal savings rate of 3 percent is nearly double that of a year ago. Economists say it could rise as high as 8 percent as households try to rebuild savings shredded by the recession.

Yet all that saving isn't exactly paying off. Personal income from interest hit $1.26 trillion in 2007, according to the Bureau of Economic Analysis. This year, that number is on track to fall by $40 billion — even though people are saving more.

RETIREES HURTING

The bureau says interest income fell 7.4 percent each month for the past three months. It means people who rely on interest from savings, such as money in certificates of deposit, are earning less.

"Savers are getting killed by these low rates," banking analyst Bert Ely said. "They're getting next to nothing."

Retirees, among others, depend on interest income. The more it shrinks, the less they have to go shopping, dine out or take vacations.

That contributes to a sluggish economic recovery. Consumer spending accounts for 70 percent of the economy. When shoppers are earning less on their investments, the businesses that depend on their money struggle.

Interest rates have fallen steadily since the Federal Reserve lowered its key federal funds rate to near zero last December and kept it there. The Fed did so to try to unlock credit and get the economy humming again.

Rates eventually crept up before falling again. They haven't fallen this low since last fall, when investors were so terrified that they were willing to stuff money into super-safe government bonds that got little or no return.

This time around, financial firms looking to impress investors and regulators are shifting more of their money into safer assets like Treasurys, analysts say.

"There may be a little bit of window-dressing going on to make the books look better," said David Wyss, chief economist at Standard & Poor's in New York.

As banks pour money into U.S. Treasurys, it forces down interest rates and yields for people with money in government debt or bank deposits.

On Friday, the three-month Treasury bill offered a return of 0.02 percent — after falling as low as 0.005 percent Thursday. That's the lowest level since a year ago, in the throes of the financial crisis.

Lower interest rates make it cheaper for people and companies to borrow, and they help sustain a weak economy. They also help keep mortgage rates low, which is key to turning the housing market around. And lower rates make it much cheaper for the government to borrow money to finance deficits.

But the government's policy of stimulating the economy by cutting rates to try to get people to borrow and spend is essentially robbing the elderly of a vital income stream, argued Greg McBride, senior financial analyst at www.Bankrate.com.

"It takes money out of the pockets of senior citizens and anyone living on a fixed income and gives it to borrowers, many of whom are overly indebted," McBride said. "It's as if Grandma stuffed an envelope full of cash, walked down the street and gave it to the guy with two new cars, a big-screen TV and who's behind on his mortgage."

DISMAL RETURNS

For some perspective on the rapid drop in CD interest rates, just look back a year. The interest rate for a one-year CD was 2.53 percent this time last year. Today, it earns just 0.88 percent.

That means a retiree with $100,000 saved in a CD could have earned $2,530 in 2008, or about $211 a month. At current rates, that same $100,000 is earning just $880 year. The retiree's monthly income has sunk to about $73.

Besides savers, low rates hurt investors in fixed-income assets like U.S. Treasurys. Demand for Treasury bonds has soared even as the government auctions off record amounts of new debt to finance record budget deficits.

Interest rates aren't expected to rise anytime soon. The Federal Reserve seems determined to keep rates low as long as unemployment remains up and consumer spending is weak.

Comments made by top Fed officials in recent days, including Federal Reserve Chairman Ben Bernanke, have convinced investors that any increase in rates is months away at the earliest.

"The Fed is not going to be tightening monetary policy for a long time," said Mark Zandi, chief economist at Moody's www.Economy.com.