Declining Saving Rate Supports Expansion in Consumption Expenditures

From 1964 to about 1988 the saving rate fluctuated more or less regularly around a constant mean. Since then, however, a rising trend has been observed. One factor was the tax reform of 1989 which resulted in – to some extend only transient – income gains, a large proportion of which tend to be saved. Another factor are statistical breaks in the year 1990 which exaggerate the upward movement of the saving rate. In the first half of 1992, expenditures of private households surpassed last year's level by 3.3 percent in real terms. A comparison of the disposable income of dependent employment and consumer expenditures yields a decline in the saving rate by 1.1 percentage points from the first half of 1991 to the first half of 1992. Especially demand for durable consumer goods was lively in the first half of 1992 (+8.3 percent).