Bench Mark Revisions and the U.S. Personal Saving Rate

Leonard Nakamura and Tom Stark

No 123, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: Initially published estimates of the personal saving rate from 1965 Q3 to 1999 Q2, which averaged 5.3 percent, have been revised up 2.8 percentage points to 8.1 percent, as we document. We show that much of the initial variations in personal saving rate across time was pure noise. Nominal disposable personal income has been revised upward an average of 8.3 percent: one dollar in twelve was originally missing. We use both conventional and real-time estimates of the personal saving rate to forecast real disposable income, gross domestic product, and personal consumption and show that using the personal saving rate in real-time would have almost invariably made forecasts worse. Thus while the personal saving rate may contain information about later consumption once we know the true saving rate, as Campbell (1987) and Ireland(1995) have shown, as a practical matter, noise in the U.S. personal saving rate makes it uninformative for forecasting purposes

Keywords: Permanent Income; Saving; Real-time data (search for similar items in EconPapers)
JEL-codes: C82 E01 E21 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-for and nep-mac
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Working Paper: Benchmark revisions and the U.S. personal saving rate (2005)
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