Description of table L.10 - Assets and Liabilities of the Personal Sector

Saving by the personal sector is saving by the households and nonprofit organizations sector consolidated with the nonfinancial noncorporate business sector. Nonfinancial noncorporate business is considered an activity subaccount of households, and the income earned from the activities of these unincorporated businesses is a component of personal income in the national income and product accounts (NIPA).

Saving for any sector is the amount not spent out of current income. In the NIPA, saving is defined as a sector's current income less its current expenditures; for the personal sector in the NIPA, saving is equal to disposable personal income (income net of taxes) less personal outlays. Measures of saving can also be constructed using the financial accounts. In particular, the financial accounts take advantage of the equality between saving and investment to calculate saving for the personal sector by adding the sector's net financial investment (its net acquisition of financial assets less its net increase in liabilities) and its net investment in tangible assets (gross investment less consumption of fixed capital, or depreciation).

Both the NIPA and financial accounts measures of personal saving are net saving, reflecting the subtraction of consumption of fixed capital: In the NIPA, consumption of fixed capital is deducted as an expense when the components of personal income are calculated; in the financial accounts, consumption of fixed capital is deducted from the purchase of tangible assets. Because capital gains and losses on existing assets do not result from current investment, they are not reflected in either the financial accounts or the NIPA measure of personal saving. Both measures also exclude net capital transfers (shown in detail on table F.9), such as estate and gift taxes, because they are not considered part of current production.

This table presents three alternative measures of personal saving--the NIPA measure and two versions of the financial accounts measure. The broader financial accounts series ("personal saving, FOF concept (FOF data)") reflects investment in all types of financial and tangible assets. The other, narrower financial accounts series ("personal saving, NIPA concept (FOF data)"), which is conceptually identical to the NIPA series, is obtained by adjusting the broader measure for three items that are treated differently in the NIPA: net investment in consumer durables, net flows of government insurance and pension fund reserves, and contributions for government social insurance in U.S.-affiliated areas. The difference between this narrower measure and the NIPA series ("personal saving, NIPA concept (NIPA data)") is equal to the households and nonprofit organizations sector discrepancy, with sign reversed (table F.100). Each of these figures--the three saving measures and the difference--is shown, at the bottom of the table, as a percentage of disposable personal income.

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