Is Saving Money a Luxury?

While the savings rate is up, it may mask the real trends.

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There has been much made of the fact that the U.S. personal savings rate has inched upwards as the recession continues. In the first quarter of 2009, it hit 4.2 percent, its highest level since 1998. But who, exactly, is able to save more money? Probably not those who lost their jobs, or those who had been struggling to make ends meet even before the recession began. Because the government doesn't collect the savings data based on income levels, there is no way to know whether it's the upper-income folks who are driving that uptick.

Tamara Draut, vice president of policy and programs at the research organization Demos and author of Strapped: Why America's 20- and 30-Somethings Can't Get Ahead, suspects that is exactly what is happening. "[Upper-income earners] have the ability to move the aggregate in a way that might be masking the continued declines in savings among low and middle-income people," she says.

All the talk about Americans' newfound frugality irks her, she says, because many of those who are saving more may be the ones that were spending frivolously before the recession began, on anything from expensive vacations to designer dresses and blow-out birthday parties for 5-year-olds. Meanwhile, she says, the struggles of lower-income groups to afford health care, food, child care, and other necessities are overlooked.