Faking The Savings Rate

Earlier this year, I'd planned to write something about the American savings rate. The source for this information is the Department of Commerce, so I went to their site in April of 2007 and downloaded the following graph:



The personal savings rate is clearly shown as negative starting in the 2nd quarter of 2005, and never recovering since. Today, I thought I'd get an update, see how the savings rate is doing so far this year:



Such a miracle! All of a sudden, the personal savings rate is positive for all but one quarter. Instead of losing money at a record pace, American households are suddenly saving money, perhaps even keeping up with inflation! The only problem is I remember in 2005 when the rate went into negative territory for the first time since the Great Depression. I have no doubt that it's still there, change of heart of the part of the Department of Commerce not withstanding. It's fitting with the times, seeing that 2007 will be the first year since the great depression that house prices fall, but I suppose come 2008, somebody might get around to faking those numbers as well.

I'm sure the statisticians who worked up the data don't see their job as faking the savings rate, they probably revised the data based on a new model, or uncovered a flaw in their recent methodology. Maybe somebody decided to include medical expenses as savings, in the theory that a stitch in time saves nine. My own theory is that Americans have been taught not to save by the Fed keeping interest rates artificially low in the face of very real inflation. Idiots like me who actually keep money in the bank rather than buying toys on credit are losing a few percent of that capital every year to the bite of inflation. It also helps keep the stock market inflated, since "investors" feel they have no reasonable alternative. Boy, is it ever going to hurt when faking the numbers just doesn't pay the piper anymore.