What happens to income that households do not spend? This DataPost entry considers savings and how deferred spending relates to interest rates and inflation.
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Personal Saving Rate: Delayed Consumption
1. Personal Saving Rate
Delayed Consumption
Federal Reserve Bank of San Francisco
Economic Education
Date last updated: September 14, 2020
DATAPOST
2. Saving Rate – Did You Know?
By 2000 personal saving (as a
percent of disposable income)
had dropped to 43% of its 1980
rate.
11.1
8.4
4.8
6.5
2
4
6
8
10
12
14
1980 1990 2000 2010
Personal Saving Rate
Definition
• 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 EducationDATAPOST
4. 0
5
10
15
20
25
30
35
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Source: Bureau of Economic Analysis
Households often
save more during
a recession
Annotated Chart Notes
Personal Saving Rate (%)
Seasonally adjusted values, Jan. 2000 – July 2020
www.frbsf.org/education/teacher-resources/datapost FRBSF Economic Education
During the 2007-2009
recession, the average saving
rate was 5.4% compared to
an average of 5.1% during the
2001 recession
DATAPOST
5. 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 2019.
(Disposable Income – Spending)
Disposable Income
X 100
www.frbsf.org/education/teacher-resources/datapost FRBSF Economic EducationDATAPOST