Saving Rate Rises to 3.4% in February


According to the most recent data release from the Bureau of Economic Analysis, savings increased to $497 billion in February, the highest level since August 2017. The U.S. saving rate rose to 3.4% from 3.2% in January. It was the second consecutive increase after a relatively low 2.5% in December last year. As shown in the graph below, the savings rate was on the downward path since 2016 when rising consumption contributed to fueling economic growth.

Personal consumption expenditures (PCE) edged up 0.2% in February. Adjusted for inflation, real PCE was virtually unchanged after a 0.2% dip in January. On a year-over-year comparison, real PCE was 2.77% higher.

Personal income climbed 0.4% in February after advancing 0.4% in January, largely driven by an increase in wages and salaries in February. Real disposable income, income remaining after adjusted for taxes and inflation, was up 0. 2%. This is the sixth consecutive increase since September 2017.

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