[yesplease]

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('odegaard', 'L')adies and Gentlemen it's my word against Oily2.

***YOU***
(motions to everybody in the room)

decide for yourself.

[yesplease]

$this->bbcode_second_pass_quote('Tyler_JC', 'I')'m curious if the increase in savings correlated with the increase in foreclosures.

If people have stopped paying their mortgages but are still living in their homes, they might be "saving" more money but it's based on stealing from the bank. The decrease in the bank's balance sheet is ignored but the increase in the borrower's balance sheet is counted as "savings".

We'd need to separate out that effect to see the real savings rate.

[odegaard]

$this->bbcode_second_pass_quote('jdmartin', 'I')nteresting thread....

It seems to me that it's a lot of sleight-of-hand, whatever the figures, especially when it's considered in a historical context.

For example:

John Doe has a $1000 mortgage, $250 in utilities, a $300 car payment, and $100 monthly minimum credit card payments on a balance of 10,000. That's $1650 in payments. John Doe makes $3500 clear per month, of which an additional $1350 goes towards groceries, gas for the car, an occasional latte at Starbucks. So he spends $3000 of his $3500 at a minimum, which would be a savings rate of about 15%, pretty good by American standards. But let's say he was putting an extra $50 per month towards the credit card balance. Does this reduce his savings rate? Well, yeah, because he's added $50 towards his liability payments. Conversely, if the credit card company decides he needs to pay $200 minimum per month, does this reduce his savings rate? Of course it does. However, in both situations, he's the better for it long-term because he's eliminating liabilities quicker.

Now let's say John Doe feels he might lose his job soon. He goes down and flips the car for a cheaper model and a longer-term loan, and after absorbing the trade-in hit gets a car payment of $250 per month (for a much longer period). Did he increase his savings rate? Yes, he did, despite the fact that his balance sheet just took a big hit. The same thing could be said if he decided to quit paying the credit cards down faster.

Historically, people had no long-term liabilities other than a 30 year mortgage. Prior to 1960 most people didn't even have a car loan. Thus, whatever they "saved" was theirs, so to speak - there weren't any hidden liabilities obscured in governmental figures. It seems to me that any discussion of savings rates without equal discussion of household debt burden is useless. It wouldn't surprise me in the least if the government's idea of a savings rate went up as people start hording cash. That in turn can have a detrimental effect on other liabilities.

[odegaard]

$this->bbcode_second_pass_quote('OilFinder2', '1'). The BEA calculates the savings rate the same regardless of the unemployment rate and other economic conditions. As they should.
2. This calculation includes everybody - employed as well as unemployed. As it should.

[ColossalContrarian]

My savings rate is going up. For example: This Mothers day I’ll only be buying my mom a card, in the past I’ve spent ~$40 on a gift or flowers or something. So to calculate how much I’m saving, it would be the price of a card minus the price of what I usually spend. My savings rate went up $35 while my spending rate went down $35.

For someone who’s unemployed, they might not be buying anything for their Mothers but instead calling to say hi. While in the past they might have spent $5-$40 so in this case, they’re saving that $5-$40 so their savings rate in this case would go up, not to mention they aren’t using gas to go out and buy a gift so their spending rate is going down.

At some point I agree, an unemployed person’s savings rate will go down if they don’t find a job and unemployment checks run out but can their savings rate outstrip all the employed people’s savings rate? I doubt it unless unemployment gets much much higher.

$this->bbcode_second_pass_quote('odegaard', 'M')y biggest beef against the BEA charts is they are based on Disposable income and NOT after tax income.

$this->bbcode_second_pass_quote('odegaard', '')$this->bbcode_second_pass_quote('OilFinder2', '1'). The BEA calculates the savings rate the same regardless of the unemployment rate and other economic conditions. As they should.
2. This calculation includes everybody - employed as well as unemployed. As it should.

[odegaard]

$this->bbcode_second_pass_quote('OilFinder2', '')$this->bbcode_second_pass_quote('odegaard', 'M')y biggest beef against the BEA charts is they are based on Disposable income and NOT after tax income.

$this->bbcode_second_pass_quote('odegaard', '')$this->bbcode_second_pass_quote('OilFinder2', '')$this->bbcode_second_pass_quote('odegaard', 'M')y biggest beef against the BEA charts is they are based on Disposable income and NOT after tax income.

[odegaard]

$this->bbcode_second_pass_quote('OilFinder2', '.')..
You are really, truly stupid. Dumb. And dense.

The BEA doesn't need to deliberately "add" in any negative numbers - if some unemployed person is drawing down their savings, that is already taken into account, because their income is 0 and their consumption is a positive number. This means their savings is negative. In my "interview" example the unemployed people were in the hole to the tune of $1500/month each. That is all you need to do.

Unemployed person example
Disposable Income: $0 per month
Consumption: $1500 per month
---------------------------------------
Savings: -$1500 per month - notice this number is negative. The BEA doesn't need to "add" in anything because doing the simple calculation already factors that in.

[copious.abundance]

odegaard you are obviously desperate to save face. I simply repeated what I wrote 4 days ago. Since you either have a deliberately selective memory, or you are becoming senile. I will repeat what I wrote, with the numbers for the unemployed people highlighted in red.
$this->bbcode_second_pass_quote('OilFinder2', 'L')et's say you interviewed 100 people. 10% were unemployed, 90% were employed.

Income
The income of the 10 unemployed people would be 0 (assuming no income from anywhere).= $0 total
Let's say the average monthy income of the 90 employed people was $2000 = $180,000 total (90 * $2000)
-------------------------------------------------------------------------------------------------
Total income among the 100 interviewees would be $180,000

Consumption
Let's say the average monthly consumption expenditures of the 10 unemployed people was $1500/month = $15,000 total
Let's say the average monthly consumption expenditures of the 90 employed people was $1800/month = $162,000 total
--------------------------------------------------------------------------------------------------
Total consumption of the entire group would be $177,000

Since savings = income - consumption, we get:
Savings = $180,000 - $177,000 = $3,000

Since we're talking about the savings rate: $3,000 / $180,000 = 1.66% savings rate.

So even though I assumed the unemployed people on average were in the hole to the tune of $1500/month, we still have a positive savings rate.

[odegaard]

Flip Flop
$this->bbcode_second_pass_quote('page 3 - OilFinder2', '')$this->bbcode_second_pass_quote('odegaard', 'O')nce again Oily2 lives up to his reputation of Intellectual dishonesty
the conscious omission of facts known to be relevant in the particular context.
The BEA charts did not factor in unemployment.

Your desperation is obvious. First you did not know what the definition of personal savings was, then today you did not know what the definition of disposable income was. The funny thing in repeating this particular accusation is that there isn't even a contradiction - counting everyone IS not taking into account the unemployment rate. That is, everyone is treated equally when the calculation is made. You are so desperate to attack me, you have to accuse me of contradicting myself where there is no contradiction. You are simply a pathetic person.
$this->bbcode_second_pass_quote('odegaard', '[')b]Flip Flop
$this->bbcode_second_pass_quote('page 3 - OilFinder2', '')$this->bbcode_second_pass_quote('odegaard', 'O')nce again Oily2 lives up to his reputation of Intellectual dishonesty
the conscious omission of facts known to be relevant in the particular context.
The BEA charts did not factor in unemployment.

[odegaard]

$this->bbcode_second_pass_quote('OilFinder2', 'L')et's say you interviewed 100 people. 10% were unemployed, 90% were employed.

Income
The income of the 10 unemployed people would be 0 (assuming no income from anywhere).= $0 total
Let's say the average monthy income of the 90 employed people was $2000 = $180,000 total (90 * $2000)
-------------------------------------------------------------------------------------------------
Total income among the 100 interviewees would be $180,000

Consumption
Let's say the average monthly consumption expenditures of the 10 unemployed people was $1500/month = $15,000 total
Let's say the average monthly consumption expenditures of the 90 employed people was $1800/month = $162,000 total
--------------------------------------------------------------------------------------------------
Total consumption of the entire group would be $177,000

Since savings = income - consumption, we get:
Savings = $180,000 - $177,000 = $3,000

Since we're talking about the savings rate: $3,000 / $180,000 = 1.66% savings rate.

So even though I assumed the unemployed people on average were in the hole to the tune of $1500/month, we still have a positive savings rate.

[copious.abundance]

$this->bbcode_second_pass_quote('odegaard', 'T')he BEA charts show a savings rate of about 4%
Why does Oily's calculations show a 1.66% rate?
The answer is obvious.
Because Oily included a negative savings rate for unemployed people so that naturally dropped the total savings rate down significantly.

[odegaard]

$this->bbcode_second_pass_quote('OilFinder2', '[')u]Income
Let's say the average monthy income of the 90 employed people was $2000 = $180,000 total (90 * $2000)
-------------------------------------------------------------------------------------------------
Consumption
Let's say the average monthly consumption expenditures of the 90 employed people was $1800/month = $162,000 total
--------------------------------------------------------------------------------------------------

$this->bbcode_second_pass_quote('odegaard', '')$this->bbcode_second_pass_quote('OilFinder2', '[')u]Income
Let's say the average monthy income of the 90 employed people was $2000 = $180,000 total (90 * $2000)
-------------------------------------------------------------------------------------------------
Consumption
Let's say the average monthly consumption expenditures of the 90 employed people was $1800/month = $162,000 total
--------------------------------------------------------------------------------------------------

[vision-master]

Things are great out there, this construction guy just stopped by with new 'phone books'. I told him I don't want em as I use the internet. He said he gets $.05 a house for delievering these. Things are l@@ken great. He has no other work right now. I'm sure he's saving a bundle.

[Tyler_JC]

$this->bbcode_second_pass_quote('vision-master', 'T')hings are great out there, this construction guy just stopped by with new 'phone books'. I told him I don't want em as I use the internet. He said he gets $.05 a house for delievering these. Things are l@@ken great. He has no other work right now. I'm sure he's saving a bundle.