Three years ago, when the personal saving rate (that is, disposable personal income minus personal outlays, usually expressed as a percentage of disposable personal income) briefly dipped below zero, it was easy to find economists willing to downplay the significance.
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I think it means that the saving rate, as measured the old-fashioned way by the Bureau of Economic Analysis, really does matter. The fact that it dipped so low in recent years should have been a major warning sign to the Fed and others that trouble might be in the offing--that American households might be dangerously exposed to financial-market stress.
The personal saving rate made a big rebound in the second quarter of this year, thanks to those government stimulus checks. It will probably drop back toward zero for a while, because it usually falls during recessions as people struggle to make ends meet. But after that I'd bet on a long rise. At least, I hope that's what happens.
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