Debt and savings fuzzy logic
Market ticker has a post about how government records debt reduction as savings. If so, that would help to explain all those graphs showing an enormous savings rate...
Personally, I always considered my own debt reduction as a form of savings, indeed, given that rates on debt are generally higher then savings accounts I considered it an enormously better form of "savings."
Market ticker has stated:
"Saving", by the way, includes debt paydowns; the government in its "infinite wisdom" computes the "savings rate" as "income less spending", which is not actually correct; money that goes from income to paying down debt isn't "saved". This increase shows that consumers continue to reduce borrowing activity (out of both choice and necessity) and are desperately trying to tread water in their sea of debt (never mind the occasional shark that comes by for a snack!)
Although for my own personal finances I consider debt reduction as a form of savings, I'd have to agree that it is wrong for government to classify the number like this. How the heck are foreclosures and restructured loans fitting into these numbers?
Market ticker has some more comments on this stuff.