> > The savings rate doesn't include which accounts?
>
>I said in that message:
>
>>> (i.e., IRAs, 401(k)s, etc.)
>
>You follow with:
>
>> Employer contribs to retirement funds are "other labor income"
>> and are included as personal income.
>
>I didn't say "employer contribs" -- I said IRAs, 401(k)s, etc.
401k's don't include employer contribs?
> > The point of looking at the low savings rate is that it's the
>> product of Americans spending a growing share of their income
>> and borrowing more to do it.
>
>Which, as you say, is "nuts" -- except that it sounds like tut-tut'ing
>to me like it always does from you.
It's not moral tut-tut'ing. It's worry that a lot of people are setting themselves up for serious damage should the economy take a hit - and the U.S. as a whole is taking enormous risks by running up huge foreign debts. Our net foreign debt was around 20% of GDP in 2001, and now it's 33%. That's why consumption's risen from its long-term average of 66% of GDP to 70%. People aren't just using low rates to buy those dream houses they can't really afford unless prices keep rising (an example of what Minsky called "Ponzi finance"), they're using them to buy stuff through home equity lines of credit. It's not just a shift away from credit cards, either - it's in addition to.
> People saved for houses, they are
>taking advantage of historically low interest rates and historically
>_different_ access to mortgages (a sea change if there ever was one:
>this is sort of like looking at the percentage of adults who voted after
>women were allowed to!) to do so, there's no good reason to carry around
>cash in a 0.7% "savings" account, the government has made tax-advantaged
>retirement savings widely available to those who can do it (and then
>they don't count it as "savings" ...!) -- what do you expect?
They do count it as savings. Why do you think they don't? Did you read the BEA's definition? Here it is again:
>Personal saving (2-6) is personal income less the sum of personal
>outlays and personal tax and nontax payments. It is the current
>saving of individuals (including proprietors and partnerships),
>nonprofit institutions that primarily serve individuals, life
>insurance carriers, private noninsured welfare funds, private
>noninsured pension plans, publicly administered government employee
>retirement plans, and private trust funds. Personal saving may also
>be viewed as the net acquisition of financial assets (such as cash
>and deposits, securities, and the change in life insurance and
>pension fund reserves), plus the net investment in produced assets
>(such as residential housing, less depreciation), less the net
>increase in financial liabilities (such as mortgage debt, consumer
>credit, and security credit), less net capital transfers received.
>and 8 of account 3).
>The fact is that the only people who ever "saved" in the past were those
>who were "able" to
Not true. People throughout the income distribution used to save more than they do now.
>I don't have a savings account. But I have tax-advantaged savings that
>I could live on for a few years ... according to you, I don't have
>"savings" -- my "savings rate" is 0%. But the truth is far different.
Of course they're savings. What else are they? Where do you get this idiosyncratic definition?
Doug