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Personal Saving RateDelayed Consumption

Federal Reserve Bank of San FranciscoEconomic Education & Outreach

Date last updated: September 8, 2015

Saving Rate – Did You Know?

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By 2000 personal saving (as a percent of disposable income) had dropped to 39% of its 1980 rate.

1980 1990 2000 20102

4

6

8

10

12 10.6

7.8

4.25.6

Personal Saving Rate

Definitio

n

• The saving rate is personal saving as a percentage of disposable income

• Personal saving is personal income (like wages or salary) minus spending

• Disposable income is personal income minus taxes

Calculation

• The most common measure of the U.S. personal saving rate is based on the National Income and Product Accounts (NIPA)

• NIPA is also used to calculate gross domestic product (GDP) and gross domestic income (GDI)

Relationship

• Personal saving reflects a tradeoff between current and future consumption

• Increased current saving reduces current consumption and enables future consumption

Sources: Bureau of Economic Analysis& FRBSF calculations

www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education & Outreach

2000 2002 2004 2006 2008 2010 2012 20140

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Source: Bureau of Economic Analysis

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Personal Saving Rate (%)Seasonally adjusted values, Jan. 2000 – Jul. 2015

www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education & Outreach

2000 2002 2004 2006 2008 2010 2012 20140

1

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Source: Bureau of Economic Analysis

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Households often save more during a recession

During the latest recession, the average saving rate was 5.3% compared to an average 4.4% during the 2001 recession

Annotated Chart NotesPersonal Saving Rate (%)

Seasonally adjusted values, Jan. 2000 – Jul. 2015

www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education & Outreach

What Do You Think?1. What was your personal saving rate last month?

A. Within a given month, add up all earnings, taxes paid, and expenses to calculate your personal saving rate:

2. Compare your personal saving rate with the U.S. average in 2014.

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(Disposable Income – Spending)Disposable Income

X 100

www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education & Outreach