Personal Savings Rate & Economic Cycles

The Fall and Rise of Personal Savings

Americans are beginning to save again, or so the media is reporting. The personal saving rate has jumped from 0.4% in 2007 to a whopping 6.9% in May. But what does that mean? Is it a good thing? And how long will it last?

The personal saving rate
“Personal saving rate” is an economic term for income that is not used immediately to buy goods and services. It’s money that consumers save for the future. (According to Wikipedia, it’s “personal disposable income minus personal consumption expenditure”.)

For decades, the personal saving rate hovered at about seven or eight percent. It would spike into the teens during times of economic turmoil, but then settle at seven or eight percent when things returned to normal. During the early 1990s, the personal saving rate began to drop. For the past ten years, it’s mostly been two percent. Or one percent. Or close to zero. …

From: Get Rich Slowly BLOG

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