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Comment by jawns | Hacker News Reader

This chart is hard to interpret, because it's depicting the change in a ratio over time, without necessarily showing the trends of the underlying measurements.

Thankfully, there's another chart that's linked from the first chart, representing personal savings rate:

https://fred.stlouisfed.org/series/PSAVERT

So I guess personal savings rate is falling over time (from ~10% between 1960 and 1990, to ~5% in 2000 and beyond), and gross national income is growing (and maybe even accelerating), which is why the ratio of one to the other has a more pronounced decrease.

Yet I wonder how this data squares with this report from last month:

"The US economy's safety net is bigger than anyone thought"

https://www.businessinsider.com/us-household-savings-estimat...

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The personal savings rate has a big spike over the pandemic, and household net wealth increased a lot between 2019 - 2022 (https://www.federalreserve.gov/publications/files/scf23.pdf)* which is maybe what that safety net headline is about.

The story seems to be large government deficits balancing out the high savings of households/businesses, which is why the overall savings rate is near zero.

* Median household net worth increased by 35% from 2019 to 2022, adjusted for inflation. For the bottom quartile of households, the median household net worth increased by a whopping 900%.

1. Business Insider is a clickbait publication. You should probably find a better source for any information.

2. Savings rate is a point in time metrics -- d/dt if you wish. A safety net would be the 'area under the curve'.

3. The savings rate is dropping because of increased unemployment and increasing inflation.

This Bloomberg piece says essentially the same thing as the Business Insider article: https://www.bloomberg.com/news/articles/2023-10-10/americans...

I like this headline on the economics page of BI: Taylor Swift and Beyoncé won't prop up the US economy much longer, with Americans' COVID-era savings running dry

Unemployment is not increasing. By any measure it is near all time lows. https://fred.stlouisfed.org/series/U6RATE

Just a nitpick, there are several definitions of unemployment. Technically all are increasing (U6, which you linked is +0.3 in the last year) but you're still correct about them being near all time lows. Definitely within normal variance range and I'd be pressed to call it "increasing" from a point of worrying rather than a "well technically" point. (this is why I hate when people are like "x has risen <huge number>%!" -- or decreased -- because it doesn't matter if the numbers are still low. +7.5% increase in unemployment sounds like a lot but it isn't because the baseline is still low. +7% of 6.7% is very different than +7% of 10%)

https://fred.stlouisfed.org/release/tables?rid=50&eid=4773#s...

So is the labor participation rate over the same time period: https://fred.stlouisfed.org/graph/?g=1b4eJ

As boomers exit the labor market, jobs free up. That may not be the only explanation but it's likely part of it.

> So is the labor participation rate over the same time period

Yes, because the denominator for labor force is the population over 16, on the premise that people age into "working age", but never age out of it, a demographic bulge entering the age range at which people both retire if they can, and frequently become unable to work even if they can't afford to retire, drops labor force participation rate when you don't have a similar demographic bulge entering working age.

The prime age labor force participation rate (the LFPR with a denominator based on prime working age having not only an entrance age of 16 but also an exit age of 55) is not low, in fact, its the highest its been any time since the dotcom bubble burst in 2001. So, yes, the low overall LFPR is entirely explained by "we have lots of old people".

https://fred.stlouisfed.org/series/LNS11300060

Here is a different calculation:

Number of people employed 2019(pre-pandemic)/2023: increase of 1.9%

Population of the USA 2019/2023 (estimates): increase of 3.5%

The situation could be the same of better (ie: it's possible the population is younger and we should account for that); but clearly the job market is doing worse (regardless of population) per-capita than in 2019. This will have inflationary effects (things are more expensive, more disruption of services, etc...) as there are more new people in the country than people working.

The way the U6 rate has been gamified, it'll probably be useless as a metric by the end of the decade.

> This will have inflationary effects (things are more expensive, more disruption of services, etc...) as there are more new people in the country than people working.

It's more or less the opposite (though with some of the same concerns); this is driven by an _aging_ population. The population is going up due to birth and immigration, but faster than that is happening, people are aging out of the workforce.

This is pretty much what all developed countries are facing; the US isn't as far along as most (it's relatively young).

> Yet I wonder how this data squares with this report from last month: > > "The US economy's safety net is bigger than anyone thought"

Don't those express the same underlying truth? In an economic situation without safety net backstops, citizens have to save in order to survive contractions. In modern america, they don't need to as much. So they don't.

FWIW this is a real problem with "savings" as a metric. It's defined based on "disposable income", therefore fails to track things that probably "should" be savings but are accounted for separatly. Your 401k match or HSA deduction is not "savings", for example, even though clearly they are, and clearly they represent the kinds of savings that would have shown up in a bank account (and thus have been technically "savings") in the 60's.

Actually what amount to "net saving" in the graph? Is it the amount of money people put in their checking/saving account? The amount including the money put in the investment account? Including retirement?

There is some description and link on the page.

  Personal saving as a percentage of disposable personal income (DPI), frequently referred to as "the personal saving rate," is calculated as the ratio of personal saving to DPI.
  Personal saving is equal to personal income less personal outlays and personal taxes; it may generally be viewed as the portion of personal income that is used either to provide funds to capital markets or to invest in real assets such as residences.(https://www.bea.gov/national/pdf/all-chapters.pdf)

https://fred.stlouisfed.org/release/tables?rid=54&eid=155443...

Do you know of any data source that stratisfies this by age group over a decently long period of time (say last 5 decades)? I would expect this number to take a nose dive as the ratio of retirees to works shifts towards retirees so i am not sure what conclusions i can draw from the data without some correction for retiree ratio.

If the GDP grows but the people saving money aren't getting the same cut, then this chart will trend down. The implication being that the middle class is getting to share in the GDP growth as the rich do. However I suppose this could also represent the rich saving fewer dollars and instead buying assets. Would be interesting to see this chart but separated by income class.

Actually median (and poorer) households did well between 2019 - 2022. See https://www.federalreserve.gov/publications/files/scf23.pdf or the related blog post https://www.noahpinion.blog/p/great-news-about-american-weal... . This chart doesn't seem to be about households alone.

Those at the bottom did well due to government "one time" contributions, not because the economic system miraculously raised them.

Yep, probably true, but the government redistributing income is in itself kind of part of our economic system.

> If the GDP grows but the people saving money aren't getting the same cut

This is much more meme than truth, and it's frustrating how many people just take this kind of statement as a prior. Here's a FRED chart of median personal income as a fraction of per capita GDP: https://fred.stlouisfed.org/graph/?g=1b46r

Indeed it has been trending downward, but... not by a lot. In the 80's it was 61% or so (so the median person got 61% of their "fair share" if the GDP was shared equally). Right now it's about 53%, up from a minimum in 2013 of about 52%.

And of course in exchange real per capita income has grown wildly (up more than 50%) in that same 40 years. If you told someone in 1980 that you could get a 50% raise, but only if the people above you on the ladder were allowed to get a 65% raise, would you have rejected it?

“Not by a lot”? The very chart you linked shows the median “share” dropping like 25% over the last 50 years.

Most people wouldn't look at 25% change in distribution over a half century as a big effect, no. Look at all the other stuff (healthcare or TV prices, say) that have swung by two orders of magnitude. And again, wealth in absolute terms has gone up by twice that!

So, no, not by a lot. I think I stand by that. If you're genuinely upset over 25% fairness in a context where everything else looks so much better, my contention is that you're just looking for something to complain about.

I’m “just looking for something to complain about” because you’re so busy looking for boots to lick

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