(Bloomberg View) -- The personal savings rate in the U.S. was 5.9 percent of disposable income in March. I saw that in the Bureau of Economic Analysis's personal income and outlays report this morning, and thought, Isn't that higher than it used to be? Indeed it is significantly higher than it was a decade ago (although it's a lot lower than it was anytime before the 1980s).
The U.S. savings rate is also higher than it used to be relative to other members of the Organization for Economic Cooperation and Development (that is, affluent countries). Here's how things stood in 1995:
Finally, here's where things stood in 2015:
So while the U.S. household savings rate was actually slightly lower in 2015 than in 1995, the country's relative position has improved from second-to-last to middle of the pack. USA! USA!
When I showed these charts to Princeton University historian Sheldon Garon, author of the 2012 book "Beyond Our Means: Why America Spends While the World Saves," he offered a note of caution:
Because incomes are so much more skewed toward the top in the U.S. than in other OECD countries, when wealthy people hold back on their spending that overall household net savings rate starts moving up even though most households aren't increasing their saving.
There's evidence for the latter assertion in the Federal Reserve's 2013 Survey of Consumer Finances, which found that families in the bottom half of the income distribution were less likely to have saved any money in 2013 than in 2007 or 2010. And you've probably heard about that Pew Charitable Trusts finding from 2015 that 41 percent of U.S. households had less than $2,000 in liquid savings, and a quarter had less than $400.
Still, there are signs of improvement. The percentage of U.S. households carrying credit card debt over from month to month fell every year from 2010 to 2015, although it has rebounded somewhat since then, according to the National Foundation for Credit Counseling. Meanwhile, the median household income rose sharply in 2015 and 2016 after stagnating for the first few years after the recession, according to estimates from Sentier Research -- meaning that the savings picture for those on the bottom half of the income distribution may look better when the numbers come out for the Survey of Consumer Finances conducted during the latter half of 2016.
So that's good news, right? Actually, economists at Deutsche Bank complained last year that the high savings rate was holding back growth. As a colleague put it in an email this morning: "It's a number that seems to provoke hand-wringing whether it's high or low. For some reason, there seems to be only 'too high' and 'too low.'" Worrying about the low savings rate has been a staple of American economic reporting for decades. So has arguing that these worries are misplaced. There seems to be no agreement on what the right saving rate might be.
Still, it's pretty clear in retrospect that the U.S. pre-crisis savings rate, which fell to 1.9 percent in 2005, was dangerously, unsustainably low. The Chinese household savings rate of 38 percent in 2014 is probably too high. So as for that 5.9 percent U.S. savings rate in March? It could be worse.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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