Comments on: The savings rate and the investment rate http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/ A slice of lime in the soda Tue, 21 May 2013 08:40:26 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: vimothy http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6507 vimothy Tue, 08 Sep 2009 16:11:17 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6507 Buying stocks and bonds is "saving". Spending on physical capital stock is "investment". Buying stocks and bonds is “saving”. Spending on physical capital stock is “investment”.

]]> By: Brett http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6392 Brett Fri, 04 Sep 2009 18:35:38 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6392 Felix, did you ever get a conclusive answer to your question? Felix, did you ever get a conclusive answer to your question?

]]> By: Andy http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6258 Andy Thu, 03 Sep 2009 03:43:28 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6258 Buying financial assets has never counted as consumption. Personal saving is defined as income less consumption. The monthly figure on PCE does NOT include purchases of stocks and bonds. Never has, never will. Buying financial assets has never counted as consumption. Personal saving is defined as income less consumption. The monthly figure on PCE does NOT include purchases of stocks and bonds. Never has, never will.

]]> By: James H http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6241 James H Wed, 02 Sep 2009 20:04:15 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6241 Also, from the FAQ section of the BEA website is the following: Personal saving is the amount left over from disposable personal income after expenditures on personal consumption, interest, and net current transfer payments. This amount is available to acquire financial assets such as bank deposits and mutual funds, to use towards acquiring a home, or to reduce liabilities by repaying principle on mortgages or consumer debt. Also, from the FAQ section of the BEA website is the following:

Personal saving is the amount left over from disposable personal income after expenditures on personal consumption, interest, and net current transfer payments. This amount is available to acquire financial assets such as bank deposits and mutual funds, to use towards acquiring a home, or to reduce liabilities by repaying principle on mortgages or consumer debt.

]]> By: James H http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6240 James H Wed, 02 Sep 2009 19:53:49 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6240 I believe that the national savings rate would include 401k contributions and purchases of stocks and bonds based on the following table from the BEA: http://www.bea.gov/national/nipaweb/Nipa-Frb.asp I believe that the national savings rate would include 401k contributions and purchases of stocks and bonds based on the following table from the BEA:

http://www.bea.gov/national/nipaweb/Nipa -Frb.asp

]]> By: DB http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6233 DB Wed, 02 Sep 2009 18:36:12 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6233 Could you please provide a definitive source for claim that "And, at least in 2006, the purchase of stocks and bonds was classified as consumption, not savings." The links do not provide enough information to trace the source of the claim. Could you please provide a definitive source for claim that “And, at least in 2006, the purchase of stocks and bonds was classified as consumption, not savings.”

The links do not provide enough information to trace the source of the claim.

]]> By: Eric http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6182 Eric Tue, 01 Sep 2009 22:41:36 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6182 I didn't look at the underlying paper, but IRS data usually means Adjusted Gross Income, which doesn't include 401(k) and other deductible retirement contriutions. So the bottom 99.9% don't save, except for their major retirement savings vehicles. That's a WAY less sexy headline, which might be why you don't see it. I didn’t look at the underlying paper, but IRS data usually means Adjusted Gross Income, which doesn’t include 401(k) and other deductible retirement contriutions. So the bottom 99.9% don’t save, except for their major retirement savings vehicles. That’s a WAY less sexy headline, which might be why you don’t see it.

]]> By: libor http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6175 libor Tue, 01 Sep 2009 19:37:08 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6175 Re: stocks/bonds on the secondary market. While the aggregate net should be zero, when you single out the investors of a single country you would need to factor in the current account balance... Re: stocks/bonds on the secondary market.

While the aggregate net should be zero, when you single out the investors of a single country you would need to factor in the current account balance…

]]> By: OneEyedMan http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6148 OneEyedMan Tue, 01 Sep 2009 14:39:06 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6148 I doubt that the the savings rate for 99% of the population is negative even if this method of measurement is correct. Contributions to defined benefit pension plans wouldn't show up in income tax returns and is a key part of saving for those of moderate income. I doubt that the the savings rate for 99% of the population is negative even if this method of measurement is correct.

Contributions to defined benefit pension plans wouldn’t show up in income tax returns and is a key part of saving for those of moderate income.

]]> By: Cole http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6147 Cole Tue, 01 Sep 2009 13:56:45 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6147 As noted by your first responder, if you spend less on goods and services than your income, the difference is counted as savings. If you use cash you have in the bank to buy a bond, then you have changed the composition of your portfolio but not actually saved anything. So it is not the act of purchasing a security that is saving, but the act of not spending as much as you make. As noted by your first responder, if you spend less on goods and services than your income, the difference is counted as savings. If you use cash you have in the bank to buy a bond, then you have changed the composition of your portfolio but not actually saved anything. So it is not the act of purchasing a security that is saving, but the act of not spending as much as you make.

]]> By: fxtrader http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6146 fxtrader Tue, 01 Sep 2009 13:06:20 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6146 If you think the wealthy have been just as scarred by the last 18months as everyone else, then it's plausible they'd want to stay overweight cash. Of course, they'd have allocations to other asset classes, but while a few years ago they might have been with a tiny cash allocation, they might conceivably have got a much large one now. Especially, as they've seen how leverage can get you into trouble, regardless of wealth. (Felix- your series of post on Annie Leibovitz is one great example) If you think the wealthy have been just as scarred by the last 18months as everyone else, then it’s plausible they’d want to stay overweight cash. Of course, they’d have allocations to other asset classes, but while a few years ago they might have been with a tiny cash allocation, they might conceivably have got a much large one now. Especially, as they’ve seen how leverage can get you into trouble, regardless of wealth. (Felix- your series of post on Annie Leibovitz is one great example)

]]> By: dWj http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6142 dWj Tue, 01 Sep 2009 12:34:34 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6142 If I buy stocks or bonds on the secondary market, someone is selling them, so it shouldn't affect aggregates. New issues and maturing of bonds would be a different story. I would assume that different data series handle this differently. It surprises me that the NIPA -- which is where the savings rate usually comes from -- would count stocks and bonds under "outlays". Looking at http://www.bea.gov/national/nipaweb/nipa_underlying/TableView.asp?SelectedTable=17&FirstYear=2008&LastYear=2009&Freq=Qtr&ViewSeries=Yes it looks to me like financial fees (commissions, expense ratios, etc.) are (properly) buried in "services", but I don't see anything that looks compellingly like net purchases of securities or the like. If I buy stocks or bonds on the secondary market, someone is selling them, so it shouldn’t affect aggregates. New issues and maturing of bonds would be a different story.

I would assume that different data series handle this differently. It surprises me that the NIPA — which is where the savings rate usually comes from — would count stocks and bonds under “outlays”. Looking at
http://www.bea.gov/national/nipaweb/nipa _underlying/TableView.asp?SelectedTable= 17&FirstYear=2008&LastYear=2009&Freq=Qtr &ViewSeries=Yes
it looks to me like financial fees (commissions, expense ratios, etc.) are (properly) buried in “services”, but I don’t see anything that looks compellingly like net purchases of securities or the like.

]]> By: Chris Allison http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6140 Chris Allison Tue, 01 Sep 2009 12:13:29 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6140 Clearly 'investing' is saving! Just because it doesnt sit at a bank doesnt mean you havent set it aside for future consumption! Why would bonds be classed different to equities? If they were would corporate bonds or high yield bonds be classed as savings? Then what happends if Citi offered a savings account with a yield equivilent to that high yeild bond? Clearly ‘investing’ is saving! Just because it doesnt sit at a bank doesnt mean you havent set it aside for future consumption!

Why would bonds be classed different to equities? If they were would corporate bonds or high yield bonds be classed as savings? Then what happends if Citi offered a savings account with a yield equivilent to that high yeild bond?

]]> By: jck http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/comment-page-1/#comment-6139 jck Tue, 01 Sep 2009 12:11:51 +0000 http://blogs.reuters.com/felix-salmon/2009/09/01/the-savings-rate-and-the-investment-rate/#comment-6139 It depends. If you buy stocks or bonds from *current period* income it counts as savings. It depends. If you buy stocks or bonds from *current period* income it counts as savings.

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