No, he's not correct. Money invested in 401k's, IRA's and stock portfolios are all counted as savings.You are mistaken. From your own post:
The difference is disposable personal income. From this it subtracts consumer non-investment expenditures, including retail sales, utilities, interest payments on consumer debt, and money people send to friends and relatives overseas. For housing, the bureau counts rent for renters or mortgage interest, property taxes and insurance for owners. It does not subtract down payments or principal payments on a house. What's left is personal savings.
Because IRA and 401k contributions are taken out first, before taxes, they are never part of disposable income and therefore not counted as savings.
You are mistaken.
No, you are mistaken. From Barron's:
Finally, several readers wondered whether 401(k) contributions are included in the savings rate tracked by the Commerce Department. They suspected it wasn't, which caused them to question whether the rate was really declining ("Why They Get Richer," March 30). But not only are these contributions included, whatever the employer throws in also is counted in personal savings. Confusion on this point arises from the fact that 401(k) money comes out of pre-tax income, while saving is defined as the difference between after-tax income and consumption. Barron's Online -- April 13, 1998http://archives.econ.utah.edu/archives/pen-l/1998m04.b/msg00253.htm
I challenge you to find one legitimate, reputable source stating that 401(k)
contributions (that's contributions, not capital gains) aren't counted in the BEA's savings rate.