Net savings as a percentage of gross national income (GNI) in the U.S. has collapsed into negative territory for the first time since the 2008 - 2009 crisis and 2020.
Components of Net Savings
How should this indicator be interpreted? Net savings represent the difference between a country's total savings, including private (business and household) and public sector savings, and total depreciation (depreciation and loss of value of capital assets).
Net National Saving and Fiscal Balance
Net business savings refer to retained earnings after taxes, fees, and dividends, adjusted for inventories and capital depreciation. Net national saving is determined by the size of the fiscal balance.
Net national saving indicates how many resources are left over from income after current consumption and depreciation of capital/fixed assets.
Net savings relative to GNI show the potential for future development, indicating how much net income is saved for future investment rather than spent on current consumption.
Consequences of Zero or Negative Net Savings
A zero or negative coefficient indicates that the national income is being distributed for consumption and there are insufficient resources for development, leading to delayed consequences such as falling investment, slow economic growth, or the realization of a crisis.
Currently, the economy does not generate enough resources to even maintain consumption levels and cover the amount of capital depreciation, indicating excess consumption and low national efficiency of economic reproduction.
Conclusion
The low national savings rate is reflected in high government borrowing, which acts as a substitute for the private sector resource deficit to sustain consumption and investment activity.
Data is only available for 3Q 2023 (with a six-month delay), but this marks the third consecutive quarter of negative savings, automatically inflating the government's budget deficit.