NEW YORK -- Accepted wisdom holds that aging "baby boomers" will push the savings rate in the United States up sharply -- but don't bet on it.
Two recent studies dispute the notion. They suggest that the savings rate will stay low, keeping interest rates high and economic growth anemic.
If these contrarians are right, banks should rein in any expectations for dramatic increases in profitability in the near future.
"Low savings rates mean higher investment costs and lower economic growth," said David Bunting, a professor of economics at EasternState University in Cheney, Wash., and the author of one of the reports.
The savings rate hit a four-year low in June, falling to 3.52 percent, according to C. J. Lawrence, Morgan Grenfell Inc., an institutional broker and investment bank. Before 1985, the personal savings rate never fell below 5 percent except for two incidents shortly after World War II. Since 1985, it has never been higher than 6 percent.
But the drop was not all due to aggressive spending by baby boomers, and the graying of the population will not necessarily boost savings rates.
Factors other than age affect individual saving rates, Mr. Bunting said. He pointed out that personal wealth plays a big part: Poor peopleare often actually "dissavers," spending more than they earn. Those low-income Americans have been dissaving at an increasing rate, while the savings rate among upper-income groups has not been increasing.
What's worse, Mr. Bunting said, the trend seems likely to continue. As the savings of poorer Americans shrink for reasons beyond their control, wealthier Americans show no indication that they will change.
Other economists also question the conventional assumption that demographic shifts will boost the savings rate.
A report by Goldman, Sachs & Co. on the outlook for the savings rate said that an examination of demographic trends "exposes the demographic saving thesis as nothing but a cruel hoax."
Savings are supposed to peak when people are between 45 and 54 years old.
But "the net influx of households into the 45- to 54-year-old bracket is so small over the next 10 years that all members of this group must save virtually every penny they earn if the national average is to move above 10 percent on account of the aging of baby boomers alone," the Goldman, Sachs analysis said.
The U.S. rate is much lower than rates prevailing in many industrialized countries. But consumption, not savings, is the norm in the United States, according to Joseph Wahed, a senior vice president and chief economist at Wells Fargo & Co. "It's a culture where spending is embedded and not saving."