The National Saving Identity states:

CA ≡ (T-G) + (S-I)

Where CA is the current account, (T-G) is the consolidated government budget balance, and (S-I) is the private sector saving-investment balance. Figure 1 depicts the profound shifts that have occurred in these components (normalized by nominal GDP).

Figure 1: Net government saving (blue), net private saving-investment balance, (red) and current account (green), all normalized by nominal GDP. NBER defined recessions shaded gray; assumes latest recession ends 2009Q2. Source: BEA, GDP 2009Q2 3rd release, Tables 3.1, 4.1, 5.1.

Note that I've omitted the statistical discrepancy which makes these items add up exactly.

How much of the recent shift in the net private saving is due to changes in personal saving (as opposed to corporate behavior)? Actually quite a bit. Of the 2.6 ppts shift in net private saving since 08Q1, 2.9 ppts is accounted for by the shift in personal

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