The Bureau of Economic Analysis released updated statistics last month showing a sunnier savings outlook for Americans than previously estimated — but some commentators note that not everyone may be sharing in the success.
After releasing first-quarter data showing the personal savings rate sat at 3.3%, the BEA recently amended its estimate to 7.2%, according to the Wall Street Journal. That works out to an additional $613.5 billion saved, which the Journal translated into 600 million iPhone X units or 20 million Ford F-150 pickup trucks.
“That was an amazing set of revisions,” economist Joel Naroff told the publication, adding that his concern over Americans’ savings situations have become “a lot less negative.”
The BEA blamed underreporting of consumer income on tax returns for the gap.
But a deeper dive into the data shows that while the overall rate has surged — the first-quarter figure exceeds the 6.4% average seen between 1990 and the present — wealthier Americans are disproportionately represented. That’s because the majority of saved money came from sources such as interest, dividends, and business profits, and not the wages that form the bedrock of most lower- and middle-income families’ incomes.
“The uneven distribution of income flows in this country may be shifting up the savings rate … but that doesn’t mean lower- and middle-oncime households are saving a whole lot of money,” Naroff told the Journal.
Over at Slate, writer Jordan Weissman was more blunt.
“In other words, a lot of that income may belong to wealthier households, who are stuffing it in their bank accounts,” Weissman wrote. “Meanwhile, middle-class families may not be saving much more than previously thought.”
For comparison, the savings rate hit a cycle low of 2.5% in 2005 in the lead-up to the Great Recession, when the economy was still booming and American consumers felt less of a need to sacrifice personal spending by stocking away money for rougher times. The harsh lessons of the global downturn, however, may have a long-term influence on Americans’ savings habits: The first-quarter rate of 7.2% came during a similarly robust economy, contradicting well-worn historical trends.
“There’s a little more frugality,” J.P. Morgan chief U.S. economist Michael Feroli told the Journal. “Maybe people are a little more cautious, a little more aware that there can be rainy days.”