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Strategies & Market Trends : World Outlook

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To: Don Green who wrote (607)6/16/1999 10:16:00 AM
From: Henry Volquardsen  Read Replies (1) of 49381
 
fwiw those stats on the US savings rate our misleading. There is a statistical quirk that understates the US savings rate when equity markets rise. Capital gains are excluded from savings while capital gains taxes are included. As an example take someone with an income of $50,000 who saves $4,000 out of income for a svings rate of 8%. Lets say this individual also had a $20,000 capital gain realized and paid a capital gains tax of $4,000. The $20,000 would not be added to income but the tax would be added expenses resulting in zero savings and a zero rate. There are a couple of other such anomalies. Analysts familiar with the stats estimate the real US savings rate has remained constant near 8-10%.
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