Personal savings as a percentage of personal income rose in January to 5 percent for the first time since March 1955, according to the Commerce Department’s Bureau of Economic Analysis.

Personal income increased 0.4 percent, disposable personal income increased 1.7 percent, and personal spending increased 0.6 percent. 

January savings rose to $545.5 billion, up 31 percent from December’s $416.7 billion, which represented a rate of 3.9 percent.

A similar savings surge occured last May, when the rate rose to 4.9 percent in the wake of the Treasury's $100 billion economic stimular tax rebate program.

Asha Bangalore, a Northern Trust analyst, wrote in an e-mail that January’s results are not representative of current conditions.

“These numbers are subject to revision,” Bangalore noted. “The significantly weak employment conditions, the recent trajectory of consumer saving, and a financially-strapped household are factors that are supportive of forecasts of another quarterly drop in consumer spending.”

In January personal income increased by $44.8 billion.income, boosted by pay raises given to federal civilian and military personnel for cost-of-living adjustments. But income was reduced by a $5.1 billion increase in personal and employer contributions to government social insurance including Social Security, Medicare and Medicaid.

Without these two considerations, personal income still increased by $24.2 billion, after decreasing by $31 billion in December.

Disposable personal income, or personal income after current taxes, increased by $183 billion. This increase is related to a concurrent decrease in current taxes of $138.3 billion during January. The increase in January follows a decrease of $17.8 billion, or 0.2 percent, in December.

If federal net non-withheld income taxes are counted, disposable personal income for the month decreased by $114 billion, according to the Bureau's Office of Tax Analysis.

Bob Maciorowski, a partner of Maciorowski, Sackmann and Ulrich, a defense law firm in Chicago, said that he hasn’t experienced any personal change in disposable income and spending since December, but he thinks that President Barack Obama needs to change his pessimistic tone.

“Instead of being on television every day and saying how bad things are, I think the president should encourage people that the economic situation is going to get better and that the future looks brighter,” Maciorowski said.

Terri Thomas, a legal assistant, said, “I don’t know if I’ve actually increased spending since the new year, if anything, I think I’ve kind of held back,” said Thomas, during her mid-morning break. “I’m doing more saving than spending right now. I would think that I have as much disposable income now as I did before because I’m paying more for rent, utilities, gas, and other things – even though they say that gas is coming down, utilities combined is still pretty high.”

According to the National Income and Product Accounts of the BEA, personal income is defined as all sources of income, and is the sum of wage and salary disbursements, wage and salary supplements, dividends, interest, rent and personal current transfer receipts. Personal income does not include government subsidies.

The NIPA uses double-entry accounting to arrive at its data for personal income – which is conceptually a balance sheet for the nation. On the left column is National Income, and on the right is Gross Domestic Product. The discrepancy between the NI and GDP is Net National Product (NNP).

The GDP results for the fourth quarter of 2008 will be released on March 26, and the next personal income and spending results will be released on March 27.