Are Americans Really Saving More?

Although officials on President Obama's economic team continue to claim that the personal savings rate of Americans is increasing, this rate has actually been declining since May. In fact, it's possible that a recovery in personal savings that began late in the Bush Administration ran out of steam early in the Obama Administration. Here is how the numbers have been trending since December:

These numbers are subject to regular, substantial change as the Bureau of Economic Analysis gets more complete data. For example, the May peak was initially claimed to be a full percentage point higher, at 6.9 percent, than it is now. September's 3.3 percent will be subject to revision up or down—and all the revisions made to monthly statistics this year have been down.

Yet the rising personal saving rate continues to be a favorite talking point about the recovery. On Sunday, Treasury Sec. Tim Geithner made the claim his closing comment in an interview with Meet the Press's David Gregory:

You're seeing them do the rational thing, David, you're seeing Americans start to save again. After a long period where people were not putting enough aside against the risk of a recession or a job loss, you're seeing people start to save again. And that's a healthy, necessary adjustment. It'll help make sure the growth is more stable, more sustainable in the future.

Geithner and others are right about one thing. The personal savings rate is a little more than one percent higher now than it was in 2005:

However, the frequent revision of these numbers means that even the uptick in personal savings over the last four years may be less dramatic in relative terms. For example, while many ignoramuses (including this ignoramus) have claimed that the American savings rate entered negative territory in the early years of the 21st century, this is not true. The personal savings rate has not been negative on an annual basis since the Great Depression. On a monthly basis, the rate has gone negative only once, in September 2001—and even this is debatable given some changes in accounting related to the 9/11 attacks.

Finally, there is not much meaning encoded in month-to-month changes in the savings rate. The claim that Americans are upping personal savings as part of the recovery—in addition to being logically faulty, given the Administration's exertions to drive the recovery by increasing spending on real estate, new cars and other items—is unsupported. If anything the data point to a trivial increase in savings, which began under the previous administration.