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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Nadine Carroll who wrote (58209)	4/30/1999 1:34:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

Nadine, The savings rate is calculated two different ways. One way uses disposable personal income and expenditures. The other way uses the accumulation of assets and debts. They show different results and as suggested by others there are problems with the measurement of both. The former is the one that generally gets press and discussion. If you would like to see some details, they are presented in the Federal Reserve Flow of Funds reports. Here is the link. The savings data is presented both ways in two separate reports. bog.frb.fed.us Wayne

To: Nadine Carroll who wrote (58209)	4/30/1999 1:58:00 PM
From: IceShark	Respond to of 132070

Nadine, Those put purchases would be savings since they were purchased with the residual of income less living expenses. I guess the easiest explanation is that the gov't. doesn't capture/measure all savings/investments, rather they impute what is left over which must be savings. It is a pretty sloppy measure since the data is coming from all sorts of disparate sources, but I still think the trend is accurate and the fact that the population is changing where they put their savings will not skew the indicator from the trend. And if you think about it, it does make sense as confirmed by consumer credit exploding and people feeling quite wealthy due to stock values so they are more inclined to spend what they earn because net worth is driving up in the portfolio. The scary part is if the market would turn south this would all work to the downside in a viscous self reinforcing cycle, ala '29. Regards, Ice