It depends on how you define savings. The authors claim that money taken from a refi is "savings" begause it improves cash flow is 100% bogus. Cash out refi's are additional DEBT, not savings. Eventually you have to pay that money back.
What we've really seen lately is a shift in the TYPE of savings that most people participate in. I know an incredible number of people who invest in their 401k's and have no other forms of savings. If they were injured or put out of work for several months, they would suffer complete financial devastation because 401k money isn't readily accessible and they have no other money to work with. They essentially live paycheck to paycheck, just setting a little money aside for retirement. In previous generations, money was put aside for retirement as well, but there was ALWAYS savings kept in a liquid form that could be called on in an emergency. I remember one point when I was a kid when my dad was out of work for nearly a year because of an injury. We NEVER suffered any financial problems because of it, because he had a considerable savings set aside for just those kinds of emergencies. That type of thing doesn't happen today.
In many ways, it's because we've become a credit driven society. We no longer think about "saving up" for a big purchase, but instead buy it on credit and pay for it over time. The entire savings ethic has evaporated in the US as easy credit made savings pointless. Of course, we're worse off financially because we now have to pay interest on things that our parents would have simply bought with cash.
I'm not any better than most with this problem, but I do try to put a very small part of my income into savings every month...even if it's just $40 or $50 dollars. If I wanted, I could take six months off work tomorrow, not change my spending at all, and still not have to worry about touching my investments, equity, or retirement accounts. That kind of financial security is increasingly rare today.
I think you misunderstood his point.
“understate actual additions to savings by excluding cash flow improvements from realized gains on equities, houses, and mortgage refinancings.”
If you refi from an 8% to a 6% mortgage, you improve your cash flow. If you realize a gain on a stock or on real estate, you have more cash to save.
The entire savings ethic has evaporated in the US as easy credit made savings pointless. Of course, we're worse off financially because we now have to pay interest on things that our parents would have simply bought with cash.
Of course your parents probably had a pension. They probably paid a much lower SocSec tax rate. They received a low return on their savings and had limited access to stock investments.