5.9 percent -- that was the U.S. personal savings rate in July 2010, according to the Bureau of Economic Analysis, or BEA, one of the federal agencies that keeps track of such statistics.
That 5.9 percent figure was slightly lower than the 6.2 percent rate the BEA calculated for June 2010 and substantially lower than the 7 percent-plus rates posts in mid-2009, but still decidedly up compared with the even lower levels -- less than 2 percent, at times -- recorded five years ago.
Of course, not all of those savings are held by banks, though plenty of people still keep their money in savings and checking accounts, certificates of deposit and other financial products that banks offer. And that's despite today's meager returns on most of those deposits.
It's easy to understand why people have stepped up their savings. High unemployment creates job insecurity. Losses on equities and real estate erode the wealth effect that people experience when such assets produce strong returns. The general sense of economic malaise prompts people to hunker down and save more for the proverbial rainy day.
Of course, some people do have the opposite reaction, turning a bad-patch economy into an excuse for a spending spree. But that's another story.
The personal savings rate also affects a myriad of other issues, such as consumer spending, income tax policy, the percentage of U.S. debt held by foreigners and retirement trends, just to name a few. The interrelations among consumer spending, personal savings and the U.S. economy alone could be the subject of many, many blog posts, not to mention articles, policy papers and dissertations.
But the big question about consumer savings today, however, is, of course, interest rates. Why are people saving more when the returns on savings in safe investments are so paltry? Some analysts say the U.S. rate of savings is still too low, but what incentives exist for people to save more?
Given the likelihood that interest rates will remain unattractive for savers "for an extended period," to use the Federal Reserve's phrase, do you plan to save more through the end of this year? If so, why?