Personal saving rate

Understand the idea

In US national accounts, personal saving is disposable personal income minus personal outlays. Divide that saving by disposable income and multiply by 100 to obtain the percentage. The result can change because income, outlays or both change. The aggregate also conceals differences between households, and later statistical revisions can alter earlier estimates.

An example

If hypothetical disposable income is 1,000 billion and outlays are 950 billion, saving is 50 billion and the saving rate is 5%. If income falls to 980 billion while outlays remain 950 billion, saving falls to 30 billion and the rate becomes approximately 3.06%. That change can occur without households increasing spending; the lower income alone changes the calculation.

Sources

• BEA: personal saving definition

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