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Household Saving and Debt

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Over the past two decades, the personal saving rate in the U.S. has declined from about 10% to 1.2%. Meanwhile, the debt-to-income ratio has nearly doubled, reaching a record of almost 1.2. Several explanations exist for at least the recent drop in the personal saving rate. Some suggest that because of the significant productivity gains made in recent years, households have increased expectations for their long-run future income and so have increased their current spending. Another explanation suggests that households save less relative to their current income because of their rising net worth, which is attributed to large capital gains in such assets as equities and residential real estate.


Suggested citation: "Household Saving and Debt," Federal Reserve Bank of Cleveland, Economic Trends, no. 04-11, pp. 06-07, 11.01.2004.

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