FRB paper, 2006
' Improved optimism about the economy reduces the need to save and...this effect may be particularly inportant in explaining the growth in consumption and debt accumulation for the wealthiest Americans.
Roger Ferguson points out that households with incomes in the top quintile have accounted for nearly the entire drop in the personal savings rate in the last 15 years with the remaining 80% continuing to save at the same rate over this period.
It is worth emphasizing the savings rate...is subject to large revisions over time...although the 1980s is now known for a high rate, preliminary data during that period show the rate near a post-Korean War low. Overall the avg savings rate from 1965-1999 has been revised up by 2.8%, from an initial estimate of 5.3% to the current calculation of 8.1%. [Nakamura and Stark]...
.....the authors found that the actual growth in non-mortgage debt was far weaker starting in 2002 than the historical trend would indicate. Indeed...real revolving debt growth [credit cards] has averaged just 0.4% over the past 4 years compared to growth of 10.0% from 1983-2000.'
Fed Res Bank of Phila, 2006.
|