Monday, June 29, 2009

Americans' savings rate jumps, but there's a catch

From Latimes.com


The government's measure of Americans' savings rate soared in May to the highest level in 15 years, but the number isn't quite what it seems.

The Commerce Department measures total personal income, then deducts personal spending to arrive at what was saved.

That isn't a very reliable way to determine whether or how much people actually are saving, because a single month's data can be skewed by unusual items.

That's what happened in May: One-time federal stimulus payments of $250 each to retirees and others receiving government aid -- so-called transfer income -- drove total personal income up 1.4% from April, while spending rose a modest 0.3%.

That boosted what the government calculates was left in people's pockets. Savings as a percentage of total disposable income jumped to 6.9% from 5.6% in April.

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