When I see this statement I can't help to see poor analysis. The statement is true for anything under the FDIC (like banks). What is left out of the picture is credit unions and 401k plans. A HUGE amount of money being saved that is not tracked by these traditional numbers.
President Bush inherited a handsome budget surplus. It could have served as a cushion for the near future, when retiring baby boomers put extra strain on the Treasury. But as the swingers say, "Cash is trash." Our so-called conservatives slashed taxes and spent wildly, turning the surplus into a deep deficit.
No he didn't. There was still a massive deficit even with the few unexpected years of a yearly budget surplus due to the dot.com boom. It wasn't going to last no matter how you sliced it. As for spending wildly, some truth and wars for our freedom are expensive...
401K isn't savings. It's investment.
This is what they mean by savings. With the penalties you get for early withdrawal from 401K, not to mention the basic fact that it's intended use is as a retirement investment, not as rainy day savings, you can't consider it saving for rainy days ahead.
I invest 20% of my paycheck in 401K, but I also have 6 months of income tucked away in CDs, staggered so that some of it is always available if trouble strikes, plus I keep a decent amount of cash in a passbook savings for immediate access, plus what's buried in the yard. THAT'S savings.
Just kidding about the buried in the yard part.
Milken Institute just did a study of Americans "debt load," and found that when all assets are measured, Americans are about where they've always been in assets-to-debt; and that when you measure forced savings like Social Security and include housing, the U.S. saves comparable to almost every other country that does not have social security and where housing ownership is poor.
Further, the "national debt" is somewhat bogus---it likely exists, but not at the numbers usually given, because by law government records must show government assets at the purchase price not at market value. Robert Eisner did an analysis of this and found that just, for example, taking that actual price of gold would substantially change U.S. government asset levels; and certainly a market valuation of LAND would show far more assets on the U.S. books than current "par" valuation does.
When I look at my personal debt, I measure (realistic) asset values to my debt, and I think I'm doing pretty well.
This has been a regular topic of discussion on FR and I am certain that 401(k) contributions are included in the government's calculation of the savings rate. I don't know about credit union savings.
The U.S. Commerce Department computes the personal savings rate (which is intended to only track current savings and not previously invested assets) by calculating monthly after-tax income from many sources, mainly wages, dividends, interest, rents and employer contributions to pensions, and then subtracting expenditures.
This method understates income and overstate expenses mostly because it does not count capital gains from the sale of stocks or homes as part of disposable income, but it does count capital gains taxes as expenditures. It also counts the purchase of a car, in a lump sum rather than dividing it up into payments as most people do.
Just because Americans spend prolifically doesn't mean they don't save. The U.S. Treasury data shows that Americans have earned $3.5 trillion in capital gains since 1997. This is more than the combined gains of the preceding 20 years. Household net worth is almost $49 trillion - double what it was just a decade ago - and only about 20% of this wealth comes from homeowner equity.