Special “Pros v. Joes” edition….

Personal saving is the amount left over from disposable personal income after expenditures on personal consumption, interest, and net current transfer payments. This amount is available to acquire financial assets such as bank deposits and mutual funds, to use towards acquiring a home, or to reduce liabilities by repaying principle on mortgages or consumer debt.

Which to me reads as though the data only considers income after-taxes, meaning that pre-tax contributions to 401(k) type plans, traditional IRAs, etc. are not accounted for in the calculations for personal savings.

I haven’t found any solid numbers for total pre-tax savings contributions made in any given year as yet, but when you consider that “77.3% of eligible employees held balances in their 401(k) plans. Pre-tax deferrals averaged 5.4% of pay for lower-paid and 6.7% of pay for higher-paid employees” [1] and that “As of year-end 2003, estimated number of plans with a 401(k) feature: 438,000, with total assets estimated
to be $1.9 trillion and 42.4 million active participants.” [2], just in 401(k) plans, it would seem that the personal savings data is missing a serious chunk of change.

I’m willing to be wrong, but I’d like to have the data to confirm that I am!

http://www.bizzyblog.com/?p=1361

401k IS considered, and if 401(k) savings is, say, 4% of all income, then people are borrowing more than they are taking in to the tune of -5% to get to the -1% reported.

What’s particularly disturbing is that the bureaucrats do not seem to being held to account for such gross errors, nor do the politicians that have oversight authority for the agencies involved seem to be doing much about it.