The savings rate: what goes into the calculation and why it moves interest rates and the debt market

The savings rate is the share of household disposable income that was not spent on final consumption during the period. It is not "how much people took to the bank as deposits" but an arithmetic residual: income minus consumer spending, divided by income. Almost every misunderstanding about the indicator grows out of this definition: repaying loan principal counts as saving, and so do banknotes kept in a box at home and a contribution to the long-term savings programme, while a thousand borrowed and spent lowers the savings rate, even though on the surface it looks like "consumer activity".

What goes into the numerator and what into the denominator

The denominator is disposable income: wages, property income, social transfers and income from entrepreneurship, net of taxes and mandatory payments. The numerator is the same amount less spending on final consumption, that is, on goods and services for the household's own use.

This gives the indicator the properties that cause it to be misread so often:

• Buying a flat is not consumption in this logic — it is accumulation, not spending. That is why a mortgage boom can push the savings rate up through the growth of assets and at the same time pull it down through the growth of liabilities.
• Repaying a loan is saving. A period in which households are actively paying down debt looks like a period of thrift, although no new savings have been added.
• Cash in roubles and in foreign currency is counted on a par with a deposit. An outflow into cash does not lower the savings rate; it only changes its form.

Why the indicator has not one figure but several versions

In Russia the savings rate is calculated on different bases, and the gap between them is not an error: they answer different questions.

Rosstat builds it within the system of national accounts: saving as the balancing item of the use of income account. The Bank of Russia looks at the financial accounts — the increase in households' financial assets minus the increase in their liabilities, divided by income. This is "saving in financial form": it ignores housing as an asset, but it shows precisely how much money went into deposits, cash, bonds and fund units. Quick survey-based readings ("do you have savings", "what part of your income do you set aside") are about sentiment rather than accounting, and they must not be mixed with the first two.

What moves the savings rate

The mechanisms are few and easy to recognise. Uncertainty drives it up sharply: in shock periods such as the spring of 2020 and the beginning of 2022, households cut discretionary purchases faster than income fell — hence the spike. The availability of credit works in the opposite direction: when borrowing is easy, consumption grows ahead of income. The interest rate acts through both sides at once — expensive money makes saving more attractive and credit more costly. Demographics add a slow drift: the age structure changes which part of society is in the accumulation phase and which is in the spending phase.

Where this share of income goes — and where it shows up

For an investor, the savings rate is valuable because it sets the size of the pool of money looking for a use. Beyond that, what matters is not its level but how it is distributed across forms.

When savings settle in deposits, they turn into bank funding and into the banks' capacity to expand lending — and that runs up against the regulatory ratios discussed in the article on bank capital adequacy. When part of the flow goes into government debt, it is visible in auction demand and in the shape of the curve — see the section on OFZ and the section on corporate bonds. When the flow reaches equities, it shows up in valuation: a multiple such as 3,92 for a large-cap name is, among other things, the price of the saver's choice between shares and a deposit. The dividend channel immediately becomes part of the calculation, and it is convenient to keep the nearest payments in view:

The full list and schedule are in the dividends and payment calendar sections; the collective form of saving is in the funds section.

The tax framework also changes the relative appeal of the forms: the tax base for investment income is defined as 13%, while the deductions for the individual investment account and for the long-term savings programme tilt the choice towards long-dated instruments. This is not a return; it is a change in the terms of comparison.

What the savings rate does not tell you

It says nothing about who exactly holds these savings: the economy-wide average is made up of households that have no buffer at all and households that save the bulk of the flow. It says nothing about the return on what has been accumulated — for that you need interest rates and asset valuations. It does not predict the direction of the market: a high savings rate means only that the fuel is there, not that it will be poured into equities specifically. And it does not distinguish voluntary thrift from forced thrift — a shortage of goods or restrictions on purchases look the same in the accounts as deliberate accumulation.

How to use it in practice

Step 1 — establish which basis you are reading: SNA or the financial accounts. Step 2 — look not at the level but at the change and its composition: the increase in deposits, in cash, in the securities portfolio. Step 3 — set it against the flow of liabilities: without the credit side the picture is incomplete. Step 4 — look for confirmation in market data: issuers' financial reports, the news flow and the events calendar.

If you come across terms that sound similar — normalised earnings, internal rate of return, normalised working capital — bear in mind that they have nothing to do with the savings rate: there the words "rate" and "normalised" mean something quite different. You can check the definitions in the glossary.