Comments on: Negative Savings Rate

By: dterry

dterry — Wed, 20 Aug 2008 13:14:10 +0000

Actually, what it means is not that “Americans spent more money than they saved,” but that they spent more money than they EARNED. Meaning, you earn $100, but spend $125. You could have taken the $25 out of your savings to spend it, or put it on a credit card. That the whole nation is doing this is, to me, a little scary.

The reason for using that particular phrase “savings rate” (which in my opinion should be explained when used) is it allows you to make an apples-to-apples comparison to other years and know you’re talking about the same thing.

By: Browser

Browser — Thu, 07 Aug 2008 16:59:35 +0000

Math or not, “negative savings” sounds strange. When something is saved doesn’t that mean it’s being accumulated? Assume my savings account had a balance of $150 at the end of June and at the end of July the balance was $100. The “math” tells me I negatively saved $50. Most normal people would simply say I lost money.

By: User

User — Sat, 02 Aug 2008 16:58:49 +0000

Savings rate, much like disposable income or interest rate, is a standard economic metric. No one was attempting to make a point with the phrasing. The value for the savings rate is the result of a formula, and that value just happened to be negative. It’s just math.

Reply from Paul: It may be a standard economic metric; however, I don’t know if the person who made the statement on the radio was attempting to make a point with the phrasing or not. His intention is unknown to me.