As already mentioned in this paper the two systems of data,
the NIPA and the Flow of Funds, give different estimates
for the household saving. The difference was formerly
relatively modest,but in the 1980s the estimates diverged
very strongly.
The divergence is identical with the statistical
discrepancy given in the Flow of Funds which amounted to
$40 to $90 billions per year in 1980 to 1987 (Table 5).One
reason for the divergence is the difference between
benefits (pensions) and investment income of pension funds
and life insurance companies which amounted to $20 billion
in 1984 and rose to $35 billion in 1986.This excess of
benefits reduced the disposable income and saving in NIPA
but it did not affect the Flow of Funds data,so that saving
there is correspondingly larger than in NIPA. Another
reason for the discrepancy may be that NIPA does not take
account of realised capital gains (they are not income)
while the Flow of Funds does. Realised capital gains
accruing to the personal sector have attained an increasing
importance in the "casino society" of the 1980s.As the
Survey of Current Business (July 1988,Table 8.15) shows
they rose from roughly $30 billion in 1981 to $137 in
1986.The main source of these gains presumably lies in the
re-purchase of shares at high prices as a consequence of
take-overs (or of defensive measures by corporations
threatened by raiders).The stock exchange boom of 1982 -
1987 has favoured speculative gains as also has the boom in
real estate.