Market rallies, savings lag

The surge in the stock market last week is surely prompting a cheer - not the least of which is at the White House. Start-of-the-year rallies are not unexpected, since many companies make large cash contributions to their pension funds at this time and the funds then invest in the market. But the recent rally was broadly based, including individual and overseas investors. If the trend continues for the next few weeks, it could mean an advancing year for Wall Street - a frequent pattern in years with early January rallies.

What needs to be kept in clear perspective by Washington, however, is that an advancing year for Wall Street - important as that is - is only one segment of a need for a comprehensive national savings and investment program. Investments in the stock market represent one form of savings. But while the numbers of individuals participating in stock transactions has grown in recent years, the mainstay of the market is still the large institutional investor - pension funds , insurance companies, and such. Indeed, what is increasingly clear behind all the good news about the stock market of late is that for the United States as a whole, the savings rate continues to remain at historically low levels.

The savings rate - savings as a percentage of disposable income - was 4.9 percent last November.

The irony is that the Reagan administration's tax cuts were supposed to have sparked a renewal in savings. Even the big spurt in individual retirement accounts the past year (now over $90 billion or so in assets), is deceptive, since much of that wealth represents transfers from other savings programs rather than new monies.

The US lags far behind its industrial competitors in savings. In Japan, the savings rate averaged over 25 percent during the 1970s, compared with 7.8 percent in the US. West Germany's average was 15.5 percent.

Why the current low US rate? Economists say consumers still have pent-up demand left over from the recession. But there are other reasons. The rise in housing values the past few decades has been perceived as a source of noncash ''savings.'' And there are now many federal and local welfare programs for persons to fall back upon in case of economic hardship.

Washington needs to consider new programs for savings. Some European nations set up special IRA-like tax-deferred savings plans for buying homes or for college education. Firms need to offer payroll deduction plans to encourage lower income Americans to invest in IRAs. Most of all, a change in national attitudes needs to be encouraged - with the concept of thrift once again seen as important as the notion of consumption.

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