Economics

Geithner Still Claims Savings Rates Are Up. Savings Rates Still Ain't Up.

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Treasury Secretary Tim Geithner, speaking in India:

While unemployment remains unacceptably high, the private sector has added jobs during four of the past five months, private investment is increasing, productivity growth is very high, the financial system is recovering, private savings have improved and our economy is now borrowing significantly less from the rest of the world.

Actual personal savings, per Bureau of Economic Analysis:

Personal savings: A rocky road down.

From February 2009, the first full month of the Obama Administration, to February 2010, the personal savings rate fell by more than one full percentage point. February 2010 is the most recent report from BEA. Had we included January 2009, the last month of the George W. Bush administration, the drop would be even more precipitous. In that month, the savings rate was 5 percent.

(I have not been able to locate the BEA report for December 2009. The placeholder 4 percent figure was derived by averaging November's 4.7 percent and January's 3.3 percent.)

None of these numbers are terribly high, so perhaps Geithner means personal savings are increasing over a longer window. There is a popular though incorrect belief that U.S. savings rates went negative in the middle of Decade Zero, so perhaps this is why the Treasury secretary never gets questioned on this point. In reality, the average personal savings rate over the past year has been about where it was during Bush's tenure, and well below where it was during the Clinton Administration:

Americans don't save anymore. Just admit it.

Geithner should explain what he means when he claims that "private savings have improved." Or he should stop claiming it.

Patriotic coverage of Geithner's visit: