SAVINGS, INVESTMENT AND DEBT OWNERSHIP
Individuals and businesses seek to increase their assets through savings and investments. They also borrow to purchase assets or finance business opportunities. The financial services industry exists to manage these activities by bringing savers, investors and borrowers together, a process known as financial intermediation. The banking industry acts as an intermediary by taking deposits and lending funds to those who need credit. The securities industry acts as an intermediary by facilitating the process of buying and selling corporate debt and equity to investors. Finance companies provide credit to both individuals and businesses, funded in large part by issuing bonds, asset-backed securities and commercial paper. The insurance industry safeguards the assets of its policyholders, investing the premiums it collects in corporate and government securities.
National saving, the portion of the nation’s current income not consumed, is the sum of savings by households, businesses and all levels of government. Spurred largely by increased saving on the part of federal, state and local governments, gross national savings grew in the late 1990s and early 2000s, peaking in 2006. By 2009 gross national savings had fallen to $1.6 trillion, the lowest level since 2003. National savings have begun to grow again, rising to $1.8 trillion in 2010 and to $1.9 trillion in 2011. The rise in national savings in 2010 and 2011 was largely spurred by increases in corporate savings. Corporate savings rose by $108 billion to $1.5 trillion in 2011, following a $171 billion rise the previous year. Personal saving, the excess of personal disposable income over spending, dipped by $54 billion to $538.5 trillion in 2011, after a $40 billion improvement in 2010. Government spending has been negative since 2002, with the sector continuing to spend more than its income. The government sector spent $1.3 trillion more than its income in 2011, about the same as in 2010.