National Savings Rate
Many folks are writing about the National Savings Rate. What are they saying? What is the Natinoal Savings Rate? These questions and others are answered below.
Here's a quote from the WSJ, discussing our National Savings Rate The article was written by Jonathan Clements.
From that, we learn that the Bureau of Economic Analysis calculates this measure. A quick trip to their website (here) didn't really help me learn anything more.
Many folks believe that the savings rate is being under-stated. Here's another quote from Jonathan Clements.
I don't currently measure my savings. I do measure how much money flows into my 401-K and Roth, but I don't have a handle on how much cash is being stashed away. This is another topic to discuss with the wife-to-be.
Thanks for reading! Do you have any thoughts on the National Savings Rate?
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According to a Census Bureau report, New Home Sales in June were at a seasonally adjusted annual rate of 1.374 million vs. market expectations of 1.3 million. May sales were revised up to 1.321 million from 1.271 million. Does this tell us anything? Read
Another record setting economic indicator was released today -- new Home Sales in April reached a seasonally adjusted annual rate of 1.316 million. Sales surged 37.2% in the Northeast market and rose 2.8% in the West. Sales fell 5.3% in the South and dropped 0.5 ... Read
The National Association of Realtors reported a new record for existing-home sales today. Sales of existing homes rose 4.5% in April to a seasonally adjusted annual rate of 7.18 million. What does this mean? -- and how does this relate to personal finance? Read
Do you know if the national savings rate includes 401K pre-tax contributions? To me it seems like that is "saving" money and not spending it.
It is a concern that the savings rate has decreased over the years but in yesterday's WSJ they also had an article that showed how a family of four was struggling on a gross income of $62,000 as the breadwinner had only little to no wage increases over the past few years. Anyone have any progressive ideas to reverse this trend?
One article I read indicated that the savings rate was misleading. They looked at the net worth and found it to be rising significantly faster. They implied that individuals are spending more of their disposable income because their other investments (primarily home equity) are rising in value.
Net Worth's may be rising faster due to home equity but people who are using their increasing home equity as an excuse not to save are in for an unpleasant wake up call.
First The current increase in home values has vastly outstripped the typical 3-4% that home values have increased for the 40 years prior to the recent boom. Will there be a mean reversion? When interest rates return to higher levels it would seem pretty logical that there would be.
Secondly, even if there isn't, you can't view home equity the same as stocks or other investments. You can take those gains and live off them. However, you kind of need your house to live IN and thus can't really live ON it. In retirement you can downsize but even the downsized houses will have experience vast house appreciation and unless you want to move into an apartment and rent you are not going to be able to get your hands on most of that house equity.
