August 30, 2013, 10:57 AM ET
Vital Signs: Saving Rate Is Slipping
By Kathleen Madigan
Weak income growth is forcing many consumers to choose between maintaining a current lifestyle or saving more for the future. So far in 2013, households are choosing to spend now and save less.
According to Commerce Department data, consumers had been socking away between 5% and 6.5% of their aftertax income in 2011 and 2012. (Income brought forward into December 2012 for tax reasons caused the rate to spike at the end of last year.) But the saving rate has fallen this year, holding at 4.4% in July.
One reason that some households are saving less is that they are reaping in new wealth from rising equity and home values. But many households have little financial cushion should a job loss or emergency expense occur.
According to Commerce Department data, consumers had been socking away between 5% and 6.5% of their aftertax income in 2011 and 2012. (Income brought forward into December 2012 for tax reasons caused the rate to spike at the end of last year.) But the saving rate has fallen this year, holding at 4.4% in July.
One reason that some households are saving less is that they are reaping in new wealth from rising equity and home values. But many households have little financial cushion should a job loss or emergency expense occur.
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