That would leave a net national saving rate of just 2.5 of GDP.

Their net effect will be to raise consumption as a share of GDP and to reduce the national saving rate.

The rapid rise in saving has reduced consumer spending, slowing the pace of GDP growth in 2009 and in early 2010.

If the saving rate now rises quickly to that level, it will be hard to keep overall GDP growing.

By contrast, China had a fixed investment rate of 41.7 of GDP and a savings rate of 51.9 , reflected in a large surplus.

The most important task for China is to reduce the saving rate, which equaled 52 of GDP in 2009.

In 2007, the United States had a savings rate of 14.6 of GDP, but an investment rate of 19.6 , generating a current account deficit.

Saving. A domestic saving rate in excess of 50 has served China well.

With a savings rate of barely 4 of GDP, the average US household is unlikely to be over saving.

If the saving rate continues to rise at the same pace in the future as it has over the past three years, the overall GDP growth rate could turn negative after a few quarters.

Higher household saving depresses consumption because it is the difference between households after tax income and what they spend.

The strength of the Indian economy is underpinned by a high saving rate and robust investment.

Meanwhile, China s savings rate remains stubbornly high.

Indeed, China s savings rate of rose steadily following the onset of market reforms, from 38 of GDP in 1978 to 51 in 2007.

Apart from accounting for the global divergence in savings rates, tight credit constraints in China might explain the country s high, and rising, savings rate especially as the large rise in national savings is attributable mostly to household savings.

No politician has publicly stated that US solvency requires such draconian adjustments, because the American public is far from agreeing to the sacrifice needed.

China s national saving rate including household saving and business saving is now about 45 of its GDP, which is the highest rate in the world.

The net saving rate fell to near zero.

The excess saving could also decline if housing construction picks up.

Instead, it reflected a fall in the personal saving rate.

However, aging will keep the saving rate from falling at the same pace.

China has shown how quickly progress can be made on infrastructure. But, unlike China, Africa s domestic savings rate is a meager 15 of GDP, grossly inadequate to finance the infrastructure gap.

Since China s external surplus is already down to less than 2 of GDP, a decline in domestic saving could result in China beginning to run a current account deficit.

But, with the current low rate of household saving, the cycle of rising deficits and debt will soon make national saving negative.

Since the saving of younger savers is now high and the dissaving of the older dissavers is low, the net saving rate is high.

Can We Increase Gross National Happiness?

An economy s current account is the difference between its investment rate and its savings rate.

The household saving rate has collapsed in recent years, falling to less than 2 .

The total fertility rate in the north central region is 3.7, with Jinotega, at 5.3, having the highest in the region (and the country).

Of course, China s savings rate will also decline, but Japan s experience since the 1980 s demonstrates how a sharp fall in investment can generate large and persistent current account surpluses, even when the savings rate is falling and the currency is appreciating.

The saving rate in each of those 25 years was between 7 and 11 .

And with that lower saving rate will come a smaller current account surplus.

The ratio of savings to gross domestic product has risen.

A country s overall consumption rate is, of course, the flip side of its savings rate.

Although the saving rate came down gradually in the 1980 s, it was still 10 in 1990.

The combination of household and corporate saving brings total private saving to 7.5 of GDP.

Looking ahead, the saving rate may rise even further, and will, in any case, remain high for many years.

So bringing the savings rate down is necessary if domestic and external balances are to be achieved.

The Japanese government has been able to sell its bonds to domestic buyers because of the high rate of domestic saving.

During the period 1967 1970, the TFR was 5.6, which was cut almost in half in the period 1995 1997. Currently, the TFR is 2.6 (SDKI 2002).

The huge surge in the GDP growth rate of the more diversified economies brought overall per capita income up to its highest rate of 2.7 per cent.

If the saving rate continues to rise rapidly, it could push America s fragile economy into another downturn.

One sure way to reduce the savings rate in China would be to develop an American style mortgage market there.

The drop in the saving rate can be readily traced to a massive increase in the rate of household consumption.

The result in Japan would then be rising real interest rates as the low private saving rate runs head on into large fiscal deficits.