Saving and Investment | |
Despite A Vibrant Economy, U.S. Savings Rate At A 63-Year Low |
Analysts are puzzled why Americans' personal savings rate has continued
to decline, despite the current health of the U.S. economy. They insist
that savings do matter to a nation's economic health.
Part of the problem is how savings are measured. The personal savings
measured by the Commerce Department reflect income left after spending.
But government does not count capital gains as income. For instance, the
purchase of a car counts as spending -- even when the money to buy the car
comes from sale of stock which doesn't get counted as income. But this does not entirely explain the problem. Although economists say
stock owners may be spending more freely, the Federal Reserve estimates
that 59 percent of U.S. households have realized no benefit from the bull
market because they own no stock. And both Commerce's savings rate and a
separate saving statistic kept by the Federal Reserve have been headed lower
for 50 years, during booming markets and stock market declines. The national savings rate, which includes business and government savings
in addition to personal savings, has actually been doing better. That is
because the federal government has managed to whittle down its deficit from
$290 billion in 1992 to a projected surplus of $63 billion this year. Source: Martin Crutsinger, "Slumping Savings: 63-year-low in U.S.
rate puzzles economists," Dallas Morning News, August 4, 1998. |
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