My Photo


  • Subscribe to emails of blog posts
    Enter your Email

    Preview | Powered by FeedBlitz

Econ Blogs


  • Get this widget from Widgetbox


« Financial Market Stress: Inching Back Toward Normal | Main | Inventory Swings & Recession: Watch Your Ultimate Customer »

May 14, 2009


Linda Keith

Bill, just what is the definition of the savings rate that economists use? Is it the difference between after-tax disposable income and spending? What spending? Does that include pay-down of equity in the home (your entire housing payment)? Does it include everything you are putting into your 401(k) or other investments?

Bill Conerly

Linda, good question. The government defines savings as the difference between disposable (after-tax) income and consumer spending. It's a residual. The government does not count up all the ways you could save, but they end up in saving. As for paying down your home mortgage, it counts as savings because you use disposable income on something other than current consumer spending.


Jerry Aalfs

Does the increase in savings indicate that there will be a "pent up demand" for investments such as real estate?

The comments to this entry are closed.