Charts 1 and 2 show that high national savings do not necessarily translate into increased personal savings. For instance, the high US national savings of the mid-to-late 1990s did nothing to improve the personal saving rate at the time. In fact, if you look close enough, you'll notice that the 20-year peak in national savings that occured in 1998 corresponds with a large drop in the personal savings rate.
As for Gros's concern about the possible reaction of international capital markets to the low US national saving rate, my view is that there is little, if any, cause for worry. Chart 3 shows that the large increase in government expenditures (i.e. negative government saving) in recent years has had minimal impact on US interest rates (for instance, on 10-year Treasuries). As explained recently by PIMCO's Paul McCulley in an excellent commentary:
Today, the putative bond market vigilantes are not wrapped around the axle about fiscal deficits in fiat currency countries [...]. Indeed, their sovereign bonds are in great demand at low yields, just as should logically be expected when the developed world private sector is running ever larger financial surpluses. Fiscal deficits are not crowding out private sector borrowing because the private sector doesn’t want to borrow. Rather, fiscal deficits are facilitating the private sector’s desire to save more, delevering their balance sheets. Remember, the government sector’s liability is the private sector’s asset! (PIMCO, July 2010, p. 3) (my emphasis)I could not have summed it up better.
|Chart 1: National Savings (% of GDP), US, 1990-Present|
|Chart 2: Personal Saving Rate, US, 1990-Present|
|Chart 3: Net Government Saving and 10-year Treasury, US|