Journal Article

The influence of housing and durables on personal saving

Abstract: The rate of national saving declined sharply in the 1980s. Some of the explanations for this puzzling performance have considered the influence of capital gains, a reduction in the need for precautionary saving, a decline in the need for retirement saving, the effect of slower income growth, and a host of other factors. ; This article explores the relationship between personal saving and the treatment of owner-occupied housing and consumer durable goods in the national income and product accounts. It examhaes the potential consequences of understating the returns on owner-occupied houses and overstating the consumption of services of durable goods. The article concludes that the greater value of homeowners investment in their residences after the 1970s and, to a lesser extent, rising outlays for consumer durable goods in the 1980s, depressed reported personal saving during the last decade, as the national accounts underestimated income and overestimated consumption.

Keywords: Saving and investment;

Bibliographic Information

Provider: Federal Reserve Bank of Boston

Part of Series: New England Economic Review

Publication Date: 1991

Issue: Nov

Pages: 3-16