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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (189677)	8/27/2002 9:45:18 PM
From: ild	Read Replies (2) \| Respond to of 436258

12:40 PM ECONOMY TALK: What's behind the low U.S. personal savings rate? Here are excepts from an article written by the Federal Reserve on the recent pattern of the savings rate: "In recent years, the personal saving rate in the United States has fallen sharply, and it is now at a very low level compared either to U.S. historical experience or to the savings behavior of many other industrialized countries. From 1980 through 1994, the U.S. saving rate averaged 8%; thereafter, it fell steeply, and since mid-2000, with allowance made for the tax rebates that boosted household saving in the months of July, August, and September 2001, it has averaged approximately 1%. By contrast, the personal saving rates from 1980 through 2001 averaged 13% in Japan, 12% in Germany, and 15% in France, with no steep declines after 1994; in fact, in France, the saving rate rose slightly. For the United Kingdom, the personal saving rate was close to the U.S. rate during the 1980 to 1994 period, averaging 9%, but it has since declined only modestly to an average of 7% after 1994, while exhibiting very large swings throughout the sample period. For Canada, the personal saving rate did decline sharply during the latter half of the 1990s, but it is still higher than the U.S. rates, averaging 16% from 1980 through 1994 and 7% since 1994. This Economic Letter examines the causes and the consequences of the sharp decline in the U.S. personal saving rate, and whether there is reason to expect that it will remain low. An understanding of these issues requires a look at how the personal saving rate is constructed, and how it is affected by the household's perceived need to accumulate wealth to meet its future consumption needs. Recently, the U.S. savings rate has increased, owing to reduced tax rates and the decline in the stock market, which tends to spur more cautious spending behavior and increase the urgency to rebuild lost wealth. bondtalk.com Report: frbsf.org