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The Declining Personal Saving Rate: Is There Cause for Alarm?

This issue brief discusses the two different definitions of the personal saving rate commonly used by analysts, one based on the Bureau of Economic Analysis' (BEA) National Income and Product Account (NIPA), and the other based on the Federal Reserve's Flow of Funds Account (FOFA). The paper examines some issues concerning the measurement of savings, discusses how the personal saving rate has changed recently and over the longer term, and shows how personal saving relates to total saving nationally. It also examine the implications of the recent changes in the definition of personal income for the decline the personal saving rate, and some of the other possible reasons for the recent decline. Projected saving trends are presented and their implications for the future economic health of individuals and the economy are discussed. (21 pages)

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