Longer view of savings vs disposable income
Updated below.
Cactus’ post got me thinking. And, holding true to my thought that we have changed our focus I decided to take a longer view.
First is at chart by year from 1929 to 2006 of the savings % of disposable income.
Notice the WWII years? This is the same time income from entrepreneurship was peaking. But, we don’t see the same relationship during the 90’s.
What is most interesting, is that share of income from wages is peaking just after this for the top 5%. The 95 to 99 group at 76.4 in 1983, the to 1% at 66.1 in 1984 and the top 0.1% at 53.9 in 1984. Only the top 0.1% see an greater peak after this and it’s in 2000 at 58.2 % of their income from wages.
Income from rents and dividends decline from the mid to late 20’s until rent income starts to rise in 88/89 and dividends income changes direction in 2000.
5/1937 to 6/1938 13 months 6 to 2 by year
2/1945 to 10/45 8 months 20.4 (years around the war 41 to 46: 12.2, 24.1, 25.6, 26.1, 20.4, 9.6)
11/1948 to 10/1949 11 months 8.0 down to 4.3 (8, 5.9, 4.7, 5, 4.3)
7/1953 to 5/1954 10 months 8.4 down to 7.4 (8.4, 8.4, 8.6, 7.4)
8/1957 to 4/1958 8 months 8.6 down to 8.3 (8.6, 8, 8.4, 8.3)
4/1960 to 2/1961 10 months 7 to 8 (7, 7.4, 7.1, 8)
12/1969 to 11/1970 11 months 8.5 to 9.9 (8.5, 8.4, 9.5, 10, 9.9)
11/1973 to 3/1975 16 months 11.7 to 9.8 (11.7, 11.2, 10.2, 10.1, 11, 9.8)
1/1980 to 7/1980 6 months 9.5 to 10 (9.5, 9.9, 10)
7/1981 to 11/1982 16 months 11.5 to 10 (11.5, 12.2, 11.6, 11.8, 11.4, 10)
7/1990 to 3/1991 8 months 6.9 to 7.3 (6.9, 6.9, 7.3)
3/2001 to 11/2001 8 months 1.9 to 0.5 (1.9, 1.2, 3.4, 0.5)
Cactus mentions GW’s worst years. It is interesting when we look at interest, rent, dividends and entrepreneurship.
For the 90 to 95 group we see their income coming from dividends (1.5 rise to 1.9) and rent (.03 rise to 1.2). Are we seeing the effects of investing in 401K’s and real estate? Interest goes down from 2.1 to 1.8% of total income.
The 95 to 99 group is the same. Dividend rise from 3.2 to 4.7 and rent from 1.8 to 2.2 with interest income declining from 3.9 to a low of 2.9.
Even the top 1% is similar. Dividend income rises from 4.2 to 6.6. Rent rises from 2.5 to 2.7 and interest declines from 5.1 to 4.8.
Income from interest is at it’s lowest in 2004 for all 3 groups.
But, when we look at the top 0.1% we see the greatest rises here. Dividends goes from 5.2 to 10. Rents don’t rise as great as the lower 2 groups going from 2.9 to 3.1. However, interest income does the opposite of what we saw, it rises from 6.7 to 7.1. The other groups fell.
The key to the puzzle I believe is in the income from entrepreneurship and the amount of income in the top 1%. For the lowest 2 groups income from entrepreneurship rises. 5.0 to 7.4 in the 90 to 95 group, 18.9 to 21.5 in the 95 to 99 group. The top 1% has a healthy change from 26.5 to 29.1, but the top 0.1% only rises form 31.3 to 35.1. As a % change this is the smallest.