Domestic and International Consequences of Low U.S. Saving

Conventional wisdom holds that the main consequence of the low U.S. saving rate will be slow growth in the future standard of living in the United States. Low saving means low investment; low investment means low productivity growth. One result will be a lower standard of living than if domestic saving and the two intermediate variables—investment and productivity—were higher. Another result will be a relative decline in the international position of the United States, perhaps in the political as well as in the economic sphere.