Personal Savings Rate Hits a High!

The personal savings rate hit a high according to the U.S. Government Bureau of Economic Analysis. The rate, as a percent of disposable income, hit 4.2% in March, which was greater than the February 2009 rate of 4.0%. As can be seen in the following chart, this not only reverses a trend, but is the highest since 2000. It seems the American Consumer has gotten the gospel. Can "Living Below Our Means" be a possibility? Nah! I assume as soon as the fear moves away, that the greed will return and spending will ramp up. Same as after each previous recession. However, saving is a good thing in the long run. We'll need that money to pay the increased taxes for the bail outs. Unfortunately, at present the reduced spending is wreaking havoc with the economy.

My personal stimulus plan is to frequent some of local restaurants and to increase my tipping. One reported a 70% decrease in business in January; a combination of nasty winter weather and the pinch of the panic.


According to the BEA: "Personal outlays -- [Personal Consumption Expenditures] PCE, personal interest payments, and personal current transfer payments -- decreased$24.5 billion in March, in contrast to an increase of $38.7 billion in February."

"PCE decreased $24.2 billion, in contrast to an increase of $39.1 billion. Personal saving -- [Disposable Personal Income] DPI less personal outlays – was $455.3 billion in March, compared with $432.6 billion in February. Personal saving as a percentage of disposable personal income was 4.2 percent in March, compared with 4.0 percent in February."

For a comparison of personal saving in BEA’s national income and product accounts with personal saving in the Federal Reserve Board’s flow of funds accounts and data on changes in net worth, go to http://www.bea.gov/national/nipaweb/Nipa-Frb.asp.