Household savings in the United States: trends and outlook

During the post-World War II period, the United States has had a low rate of household saving compared with other developed countries. The latest saving rate remains close to an historically low level, slightly over 4 percent of personal disposable income. This rate is about half that recorded between 1980 and 1985. Various possible reasons for the decline of the U.S. saving rate are discussed and include lack of growth in real income; the life-cycle movement of the baby boomers; and the "wealth effect" from rising asset values. As the baby boom generation matures, the household saving rate should increase. By the year 2000 households headed by persons aged 45-54 will rise to 20 percent and then to 22 percent by 2010. An increase in the number of such households should boost both aggregate and rate of U.S. saving. Independent saving is encouraged to help lessen the impact that changes in Social Security and continued corporate restructuring might have in the future.