What Do Personal Savings Figures Tell Us?

Abstract

THE AMOUNT OF SAVINGS that will be available during a given period to absorb the flow of new securities is of great importance to the investment industry. Not the entire amount of flows through the investment markets. Some part is invested by the savers directly in homes, farms, or unincorporated business. Normally, however, the larger proportion flows through the capital markets and is available for investment in private and Government securities. Current official estimates of saving have been available on an annual basis for more than a decade, and in more recent years quarterly estimates have been published regularly. Those estimates, prepared by the highly competent staff of the U. S. Department of Commerce, are part of the system of national accounts gradually evolved from the original national income series. Another body of related information is quarterly estimates of liquid savings which in recent years have been released by the equally industrious and competent staff of the Securities and Exchange Commission. Even though official estimates apply to past periods only, the analysis of recent savings trends is obviously of great interest to the investment industry. What do these savings estimates tell us about that portion of current income of individuals which is not spent on current consumption and for which the various savings and investment media compete? Savings estimates of the Department of Commerce, labeled savings, actually represent some of the most complex economic data currently published. In the first place, they do not represent savings of physical persons only. Within the framework of national accounts, which have to meet the needs of a large variety of users of statistical data, many compromises and simplifications are necessary. One of such compromises involves the definition of persons. The personal sector of the economy includes everything except the Government and the business sectors. Not only individual income receivers but also financial intermediaries are included in the category of on the theory that, in the last analysis, net income of