Personal Savings Rate in the U.S.
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The purpose of this research is to examine the personal savings rate in the United States (US). Considered in this examination are the causes, consequences, and cures of the country's low personal savings rate. This topic is especially relevant in late 1989, as the country's personal savings rate continues to hover around the 4.0 percent level the lowest of any industrialized country,1 at a time when the country is heavily dependent on a continuing infusion of foreign capital to provide for credit and investment needs in both the public and private sectors of the economy.2 SAVINGS IN THE UNITED STATES Saving by individuals occurs when current disposable income (personal income after taxes) exceeds current consump tion expenditures.3 Over the past 50 years or so, the personal savings rate in the US has been substantially lower than that of other industrialized countries. A part of the reason for the lower personal saving rate in the US is the result of an American behavior characteristic, which pursues immediate gra tification. Another part of the reason, however, is federal government policy, which has, for the most part, been designed to stimulate consumption rather than saving.4 Data pertaining to the personal saving rate and to real per capita personal disposable income in the US for the 1976 1988 time period are presented in Table 1, which may be found on the following page. As the data presented in the table indicate, the personal sa
. . .
5.9 9,829
1980 6.0 9,722
1981 6.6 9,769
1982 5.8 9,725
1983 5.5 9,942
1984 6.5 10,412
1985 4.6 10,483
1986 3.9 10,786
1987 3.8 11,000
1988 3.7 11,218
Sources:
(1) Council of Economic Advisers. Economic Indicators (July 1989) and (February 1984).
(2) Council of Economic Advisers. Economic Indicators (July 1989) and (February 1984).
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long term impact on individual consumption. As home ownership is one form of saving, however, there may also be a nagative long term imp
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Approximate Word count = 1446
Approximate Pages = 6 (250 words per page)
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