Supplemental Figure: Saving rate
The Saving Rate (top panel), tracked quarterly, has little benefit as a forecasting tool. It is calculated by subtracting all consumer spending (personal consumption expenditures) from disposable personal income (all personal income less taxes). As a “residual”—i.e., the subtracted difference between two such gigantic numbers—its accuracy in necessarily questionable. Changes in the Saving Rate are often volatile and have historically not provided any reliable guidance to the direction of consumer spending. It is, nevertheless, a interesting general guide to changes in Saving and borrowing (
dis-saving).
The bottom panel tracks
Y/Y changes in the Saving Rate. If the quarterly Saving Rate rises 2% (200 basis points—see scale) from a year earlier, it theoretically reduces Y/Y growth in consumer spending by 2 percentage points. If it falls, it increases the rate of growth in consumer spending. As the bottom chart shows, such changes are quite volatile.
Updated: 10/3/15