Perspectives on the Household Saving Rate

IN SEPTEMBER AND OCTOBER 1998, the personal saving rate as measured
in the national income and product accounts (NIPAs) dipped below zero
for the first time since the Great Depression. For the entire year, personal
saving totaled just 0.5 percent of personal disposable income, the lowest
rate since 1933. And in the advance estimate for the first quarter of 1999,
the personal saving rate fell to –0.5 percent. These results are just the latest
steps in the decline of the NIPA personal saving rate, which, after
averaging 7.6 percent in the 1960s, 8.2 percent in the 1970s, 6.7 percent
in the 1980s, and 4.8 percent in 1990–94, fell to 3.0 percent in 1996 and
2.2 percent in 1997. Although both academic publications and the popular
press have repeatedly warned of a saving crisis over the last twenty
years, the virtual disappearance of personal saving since 1998 has brought
the issue back into the limelight.