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New Government Data Show Higher Savings Rate Than Expected

July 27, 2018 - 4:59 pm
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NEW YORK (WCBS 880) -- New government numbers show that Americans have been saving much more than expected.

Bloomberg reporter Rich Miller explained the government went back the past 11 years and boosted the savings rate it had reported in 10 of those years. The greatest increase was seen in 2017, when the rate went to 6.7 percent from 3.4 percent.

“So it looks like we’re not quite the spendthrifts that many people accuse us of being,” Miller told WCBS 880’s Michael Wallace.

Miller explained that every five years, the Bureau of Economic Analysis overhauls its numbers for how much people are saving and spending – going back to source data from the IRS.

“It found that small business owners, and people who have their own business – like an accountant who have his own business – are making a lot more money than they thought, and it’s there because they’re making a lot more money, and that money wasn’t being spent,” he said. “That’s why the savings rate went up.”

Miller noted that increased savings rate was attributable to small businesses and not individual workers.

“It’s not because the worker bee is getting more money in wages. It’s because, you know, the dry cleaner down the block is doing better than we thought,” he said.

Miller added that there is no consensus on an ideal savings rate, but economists tend to agree that a savings rate greater than 5 percent is positive.

“I mean, you need to have some money, first of all, from an individual point of view, when something bad comes along, and also, you know, there are a lot of things that are worth saving on. But I don’t think anybody agrees that there’s like an ideal savings rate, and arguably, you know, you can save so much money that you don’t have much of a life,” he said.