PERSONAL SAVINGS IN THE UNITED STATES
This research examines the personal savings rate in the United States as a function of disposable personal income. Additionally, this research addresses the issue of the differences in the rate of personal savings in the United States and that in other industrial economies.
The personal savings rate is defined as the proportion of disposable personal income that is not devoted to personal outlays. Disposable personal income is defined as personal income less personal tax and personal non-tax payments. Personal outlays are defined as the total of personal consumption expenditures, interest paid by consumers to businesses, and net personal transfer payments to foreigners. Personal income includes all wage and salary disbursements, other labor income, proprietor income adjusted for inventory valuation and capital consumption, rental income of persons adjusted for capital consumption, personal dividend income, personal interest income, and transfer payments less all personal contributions for social insurance.
The relationship between the personal savings rate and disposable personal income in the United States is examined for the ten-year period 1980-1989. The relationship is examined quantitatively through the application of regression and correlation analysis to the annual data for the period of analysis. The relationship is examined with disposable personal income stated on both total and per capita bases. Further, the relationship is examined with disposable personal income stated in both current (nominal) dollars and inflation adjusted (real) dollars. Inflation adjusted values are stated in terms of 1982 dollars. The statistical significance of the relationship between the personal savings rate and disposable income is tested at the p<.05 level.
The data upon which the analyses are based are presented in Table 1, which may be found on the following page. The personal sav...