The personal saving rate is a macro indicator that often gets misused in arguments. But it’s still a useful context signal for “how much buffer households are building (or burning)”.
What the savings rate is
The personal saving rate is:
- the share of disposable personal income that is saved (not spent).
It’s a macro average, not a rule for individuals.
What it can signal
Broadly:
- when saving rates are rising, households are (on average) rebuilding buffers,
- when saving rates are falling, households may be drawing down buffers to maintain spending.
That’s relevant to Kill Line thinking because buffers are what prevent shocks from cascading.
What it does NOT tell you
The savings rate does not tell you:
- whether lower-income households are saving more (distribution matters),
- whether households are borrowing to maintain spending,
- whether savings are liquid or illiquid.
So treat it as a context lens, not a diagnosis.
Household takeaway: measure your buffer in months
A simple household metric:
Liquid buffer (months) = liquid assets ÷ essential monthly expenses
If your buffer is small, the macro environment matters more: shocks hit harder.
Primary source
- FRED PSAVERT: https://fred.stlouisfed.org/series/PSAVERT
Disclaimer
This is educational content only and not financial, legal, medical, or investment advice.