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					  Alternative Measures of
      Personal Saving
By: Maria G. Perozek* and Marshall B. Reinsdorf**
Survey of Current Business 82 (April 2002): 13-24.




          *Federal Reserve Board
       **Bureau of Economic Analysis
        Chart 6: Net National Saving

10
 9
 8
 7                                  Personal
 6                                  saving, NIPA
 5                                  definition
 4                                  Net national
 3                                  saving
 2
 1
 0
 1980   1985   1990   1995   2000
Recent changes affecting household
          saving, wealth
• Dramatic stock market rise (1995 - March
  2000) and fall (March 2000 - present).
• Large changes in net worth, mostly
  reflecting holding gains.
• Marked decline in personal saving from 8.7
  percent in 1992 to 2.3 percent in 2001.
Interpreting Personal (household) saving


• Issues with sector definitions
• Defined benefit pension plans
  – large holding gains can make the plan “over
    funded,” meaning that the employer is not
    required to contribute to the plan.
  – DB plans explain about 1 percentage point of
    the drop.
     Chart 1: Effect of Excluding DB Pension
           Plans from Personal Saving

12                                       Published
10                                       measure
8
6
4                                        Excluding
                                         defined
2
                                         benefit
0                                        pension
1980    1985   1990   1995   2000        plans
        Consumer durable goods

• BEA has measures of consumer durables
  stocks and net acquisition, based on
  perpetual inventory model.
• Part of decline in saving rate reflected net
  acquisition of durables
       Chart 2: Effect of Counting Investment in Consumer
                             Durables

                                                Published measure
14

12                                              Consumer durables
                                                as investment
10

8

6

4

2

0
1980         1985          1990          1995             2000
        Effect of inflation

• Inflation was mild in USA during 1990s
• Because households net lenders, inflation
  causes saving to be overstated.
• Compared with early 1980s, effect is about
  2 percentage points.
     Chart 3: Effect of Using Real Interest

12

10

 8
                                        Published
                                        measure
 6

 4                                      Inflation-
                                        adjusted
                                        interest
 2

 0
 1980    1985   1990   1995   2000
-2
          Capital gains taxes
• Capital gains are excluded from disposable
  income but taxes are treated as current
  taxes.
• Growth in capital gains taxes accounts for
  about 1 percentage point.
       Chart 4: Effect of Leaving Capital Gains Taxes in DPI

12


10


8
                                                    Published measure

6
                                                    Leave capital gains
                                                    taxes in DPI
4


2


0
1980      1985      1990      1995      2000
Measures of wealth accumulation
     Chart 5: Sources of Changes in Wealth

80
70
60
50                                   Change in net
                                     worth, percent
40                                   of DPI
30                                   Capital gains,
                                     percent of DPI
20
10
  0
  1980
-10      1985   1990   1995   2000

				
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