Those projected federal surpluses may be reassuring after years of piling government debt on debt, but there is evidence they are to blame for the declining rate at which Americans are saving money.

Wall Street economist Peter L. Bernstein has developed data which shows that the rise in government savings as a share of gross domestic product has almost exactly offset the decline in personal savings. Economists define government "savings" to include the excess tax revenues that make up the budget surplus.

• Personal savings have declined from more than 7 percent of disposable personal income in 1993 to around 2 percent recently -- although "savings" doesn't include capital gains and "income" doesn't include gains that are realized when stocks are sold.

• During the exact same period taxes began taking an increasing share of national income -- mainly because of real income growth among the wealthy, who face the highest tax rates.

• Moreover, the big rise in consumer outlays as a percentage of pre-tax income actually began occurring back in 1993 -- which seems to puncture the theory of the "wealth effect," which didn't come into vogue until recently.

Thus, says Bernstein, the wealth effect is exaggerated, consumer spending is less exuberant than many believe and the savings rate is understated.

Source: Gene Koretz, "Don't Fear the Wealth Effect," Business Week, March 20, 2000.