Private Saving in the United States: 1950-85

The official personal and private saving statistics contain a number of conceptual measurement errors. In this paper we develop and analyze personal and private saving measures adjusted for the difference between income tax payments and actual liabilities, saving via net purchases of government pension assets (including social security) and consumer durables, and that part of after-tax interest income attributable to inflation. We find that the adjusted personal and private saving rates in recent years are only slightly below their post-1950 averages, not at all time lows as reported in the official NIPA statistics. Furthermore, over the past 35 years, personal saving has been more volatile and corporate saving less volatile than the official measures. Also, the inflation premium corrections remove the negative correlation between personal and corporate saving. That is, the often observed negative correlation between the official measures of personal and corporate saving is due solely to measurement errors in the two series. Finally, the decrease in federal government saving in the 1980s is the continuation of a 30-year trend, not a one-time aberration.