Personal Savings Rate

As I noted in 'Paradox of Thrift' and is highlighted in this article, the personal savings rate has gotten a lot of attention lately. So how exactly is the personal savings rate calculated?

There are two main sources for the calculation of the personal savings rate (PSR); the U.S. Bureau of Economic Analysis (BEA) estimates it from the National Income and Product Account (NIPA) data, and the Board of Governors (BOG) of the Federal Reserve System estimates the changes in personal net wealth that can be computed from their flow of funds (FoF) accounts.

The PSR value from the BEA is the one most commonly used and quoted in the press. It is calculated by first finding personal savings:

(personal income) - (personal outlays + personal current taxes) = personal savings

This value is then divided by personal income to get the rate.

What exactly is personal income? According to the BEA glossary it is: Income received by persons from all sources. It includes income received from participation in production as well as from government and business transfer payments. It is the sum of compensation of employees (received), supplements to wages and salaries, proprietors' income with inventory valuation adjustment and capital consumption adjustment (CCAdj), rental income of persons with CCAdj, personal income receipts on assets, and personal current transfer receipts, less contributions for government social insurance.

What are personal outlays? From the BEA: The sum of personal consumption expenditures (e.g. the goods and services purchased by persons), personal interest payments, and personal current transfer payments.

Personal current transfer payments are payments consisting of transfer payments by persons to government and to the rest of the world. Payments to government include donations, fees, and fines paid to Federal, state, and local governments, formerly classified as "personal nontax payments."

What about personal taxes? These include taxes paid by persons on income, including realized net capital gains, and on personal property.

The NIPA tables can be found here.