What happens to income that households do not spend? This DataPost entry considers savings and how deferred spending relates to interest rates and inflation.

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

3. 0
5
10
15
20
25
30
35
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Source: Bureau of Economic Analysis
Personal Saving Rate (%)
Seasonally adjusted values, Jan. 2000 – July 2020
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