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The data on personal saving suggest somewhat fewer vulnerabilities and more resilience in the household sector.In addition to reporting that real GDP increased at a 4.1 percent annual rate in the second quarter of this year, output in the first quarter was revised upward somewhat, and this was preceded by considerably more income growth.In nominal terms, the level of personal saving is nearly double what was reported over the prior four quarters. Relative to disposable income, the personal saving rate is now estimated to be 6.8 percent, not the 3.2 percent reported in May. Moreover, the saving rate has been moving sideways, at above 6 percent, over the past five years, rather than falling precipitously, as was previously thought. Based on these data revisions, a heftier portion of this wealth accumulation came the old-fashioned way, by consuming less income.While real growth rates of 4 percent or higher are not in the immediate future, the U.S. economy will probably expand by 3 percent in 2018, a pace not achieved in a dozen years.
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