Savings Rate Near Record Lows

Chart of the Week for August 12-18, 2005

The above chart illustrates personal savings as a percentage of disposable income through July 2005. While personal income growth exceeded expectations by rising 0.5% for the month of July, the savings rate fell to the second lowest rate on record to 0.0%. Growth in wage income was up a mild 0.2%, with rental income continuing to decline for the month. Improving labor markets are expected to provide support for future wage growth as rising interest rates may decrease the willingness of consumers to use debt to support spending. Support of wage growth will be a contributing factor in helping to raise the savings rate from these near record lows.

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