Savings rate up, but . . .

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The government’s measure of Americans’ savings rate soared in May to the highest level in 15 years, but the number isn’t quite what it seems.

The Commerce Department measures total personal income, then deducts personal spending to arrive at what was saved.

That isn’t a very reliable way to determine whether or how much people actually are saving, because a single month’s data can be skewed by unusual items.


That’s what happened in May: One-time federal stimulus payments of $250 each to retirees and others receiving government aid -- so-called transfer income -- drove total personal income up 1.4% from April, while spending rose a modest 0.3%.

That boosted what the government calculates was left in people’s pockets. Savings as a percentage of total disposable income jumped to 6.9% from 5.6% in April.

“With spending up only 0.3% . . . the extra income pushed the personal saving rate to 6.9%. However, this will come off [in June] as transfer income falls back to more normal levels and as some of the money works its way into the spending stream,” economists at Goldman Sachs said in a report Friday.

They believe the underlying savings rate remains near the 5.6% level of April.

Still, that’s a vast improvement from what had been an official U.S. savings rate near zero for much of the time from 2005 through early 2008.

The rate was just 0.4% in 2007.

Given the economy’s crash, many people clearly have gotten religion about saving money, if they’re at all able to do so. And banks are one of the biggest beneficiaries of that shift, as they rake in cheap deposits from people who don’t want to take risks with the money they’re salting away.

Just since mid-September, when the economy fell off a cliff, total savings deposits at U.S. banks have surged by $500 billion, or 12.5%, to $4.48 trillion, according to Federal Reserve data.


That money isn’t entirely owned by individuals; savings deposits, which include bank money market accounts, include the cash of businesses and others that use those accounts.

In any case, bankers love it: Most, of course, pay much less on savings accounts than they do on certificates of deposit. The average annualized yield on bank money market accounts with a minimum $10,000 deposit is currently 0.57%, according to rate tracker Informa Research Services.

By contrast, banks are paying an average of 1.41% on one-year CDs.