The generally accepted explanation for the decline in personal savings is that Americans look to their stock market and real estate gains to salve their consciences as they sally forth to buy more things. Economist Ian Morris of HSBC Securities doesn't disagree with this view, but he thinks there is another factor involved -- the federal budget surplus.

Here is an outline of Morris' theory:

• The personal savings rate began to decline sharply well before the huge run-up in stocks -- but it coincided with the beginning of the shrinking of the federal deficit as a share of national output.

• In effect, rising government saving -- or less dis-saving -- has been offset by falling personal saving.

• This suggests that people's savings behavior is highly responsive to government borrowing.

• As economist David Ricardo theorized in 1817, people realize that rising government deficits foreshadow rising future taxes -- and so they postpone their consumption and boost their savings to prepare for the taxes ahead.

Conversely, they respond to falling deficits and government surpluses by lowering savings, Morris believes.

He finds further evidence to bolster his theory from similar behavior abroad. Australia, Britain, Canada, Holland, Italy, New Zealand, Portugal and Sweden all saw sharp declines in their personal savings rates in the 1990s. And all also posted improvements in their structural government budget balances -- cyclically adjusted.

Source: Gene Koretz, "Are Surpluses Hurting Savings?" Business Week, October 2, 2000.