America: Not Now, Or Ever, A Thrifty Country

Catherine Rampell has a piece in this morning's New York Times observing that "The economic downturn is forcing a return to a culture of thrift." But that observation depends a lot on how you define "return" and "thrift," and while it's clear American savings rates are on the rise -- they've been so unsustainably low that it's hard to expect anything else -- it's less obvious that Americans are becoming truly thrifty. That's because America is not a thrifty country.



First, there's an historical question. What have savings rates looked like in the past, and how have they changed after previous recessions? I thought this graph (from Calculated Risk, via Matt Yglesias) put some of that in perspective. (This is the personal savings rate since 1959, and the shaded blue lines are the recessions.)

So the savings rate did tend to fluctuate a bit in previous recessions, though not by a great deal and not with any particularly admirable degree consistency. More importantly, an increase in the savings rate from somewhere around 0% (in 2005) to somewhere around 4% (where it is now) can be described as thrifty only because a 0% savings rate is an impressively terrible accomplishment by any standard.

I looked for some good international data on this, but the closest graph I could find was this one, from Brookings, that compares private savings rates between the US, Europe and Japan. (The numbers look different because the Brookings chart is gross private savings -- the savings from households and firms -- whereas the above data is only household savings.)