Talk about a morality tale turned upside down: Free-spending Americans are the economic envy of the world, while the Japanese, those industrious savers, are swamped by economic troubles.

Americans' personal savings rate dipped to 0.2 percent in June, the lowest level since the government began tracking savings on a monthly basis in 1959, officials said Monday.And newly revised annual figures, which go back further, are abysmal as well. They indicate the personal savings rate dipped to a 63-year-low of just 2.1 percent last year. Not since the nation was in the Great Depression during the 1930s has the savings rate been lower.

But these aren't depression times. Far from it. The nation has enjoyed 71/2 years of uninterrupted growth. Jobs are plentiful and incomes are rising.

So why isn't the savings rate going up? Especially when 73 million baby boomers - one-third of the population - are headed into what should be their peak saving years, their 40s and 50s, a time to squirrel away money for retirement, given the widespread doubts about Social Security.

Despite the U.S. economy's current superior performance, economists insist that savings do matter to a nation's economic health. It is from this pool of money that businesses borrow to make the investments in new factories and equip-ment that boost productivity. And rising productivity - moreoutput per hour of work - is the key to rising living standards.

"The lower the savings, the lower the investment and ultimately, the lower the growth in productivity," said Mark Zandi, economist at Regional Financial Associates in West Chester, Pa.

But a large pool of savings is not all that's needed. The money must also be invested wisely. And that is where Japan and other Asian nations have gone wrong, analysts say.

Too often, the Asian money went into building factory capacity that was not needed or office towers that now stand vacant.

"In Japan, you had a very high savings rate but a system that did not put capital to very good use," said Robert Shapiro, Commerce undersecretary for economic affairs. "Japan has a highly regulated, highly insulated system."

In the United States, by contrast, venture capital firms are constantly looking for the next hot idea, ready to invest.

Foreigners, also, are eager to grab higher returns by investing in the United States. That flow of foreign money offsets the smaller pool of personal savings.

None of that, however, explains why the U.S. savings rate is so low. Economists admit they don't have any easy answers. Part of the problem lies in how the government measures the statistic.

The personal savings rate measured by the Commerce Department reflects income left over after spending. But the government does not count capital gains as income. Thus, the purchase of a car counts as spending, even when the money to buy the car comes from the sale of stock, which doesn't get counted as income.

And a rising stock market often prompts owners of stock to spend more freely, even if they aren't selling shares to do so. That higher spending relative to incomes has also helped to lower the savings rate.

But even those factors don't entirely explain the problem. Both Commerce's savings rate and a separate statistic kept by the Federal Reserve have been headed lower for 50 years, during booming markets and stock market declines. And the Fed estimates that 59 percent of American households have realized no benefit from the bull market because they own no stock.


Additional Information

Year-by-year rate

The annual personal savings rate by year as compiled by the Commerce Department:

1997 2.1 percent

1996 2.9 percent

1995 3.4 percent

1994 3.5 percent

1993 4.4 percent

1992 5.7 percent

1991 5.6 percent

1990 5.1 percent

1989 5.0 percent

1988 5.4 percent

1987 5.0 percent

1986 5.9 percent

1985 6.9 percent

1984 8.6 percent

1983 6.7 percent

1982 9.0 percent