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  • Wen Capital Advisory Group

U.S. Personal Savings Rate

The savings rate is the government’s estimate of how much U.S. households are saving.




The U.S. personal saving rate stood at 3.4 percent at the end of 2022, down from the 7.5 rate at the end of 2021.The personal saving rate is the federal government's estimate of what percent of their incomes U.S. households are saving. But market watchers and economists are mixed on what can be learned from swings in the saving rate.1


Why Economists Struggle

They struggle with the personal saving rate because it's a derivative number – that is, it's not measured directly. Instead, the Bureau of Economic Analysis derives the saving rate from other estimates. Here's how it's calculated:2


  1. The Bureau of Economic Analysis subtracts payroll and income taxes from personal income to get disposable personal income.

  2. The Bureau then subtracts its estimate of personal outlays, which include expenditures, interest payments, and payments, from disposable personal income to get an estimate of personal savings.

  3. The personal saving rate is calculated by dividing personal income by personal savings.


As currently structured, the U.S. Personal Saving Rate does not include capital gains from the sale of land or financial assets in its estimate of personal income. This effectively excludes capital gains – an important source of income for some.


Gaining Insight

Gaining a bit of insight into a popular economic indicator can help you better understand trends as they are discussed in newspapers and websites. However, don't let your long-term savings program be influenced by a national number.


CITATIONS

2. BEA.gov, 2023


This material does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.


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