NEW YORK — Now that America's savings rate has been negative for an entire year, a first since the Great Depression, the question is whether we're a spendthrift nation on its way to the poorhouse or whether we're looking at the wrong numbers when we calculate savings.

The personal savings rate is, essentially, the amount of after-tax income left once household bills are paid. Maybe it's $75 for a household, maybe it's $7,500, but as a percentage of income, it's declining.

The personal savings rate used to be 10 percent of disposable income from 1974 to 1984, according to the Bureau of Labor Statistics. It fell to 4.8 percent by 1994, and was negative for all of 2005. As of January, the personal savings rate was minus 0.7 percent.

With retirement looming for the baby-boom generation, the concern is that a dearth of savings now could cause a cutoff in spending later.

Some economists say that's far-fetched. They argue the personal savings figures are artificially low, since the numbers don't include increases in assets such as equities and homes.

Yale University economics professor William Nordhaus made that argument in 2002 congressional testimony, saying that once assets were included, the savings rate for the 1990s would have been a robust 25 percent.

European countries count capital gains and home appreciation when they calculate personal savings, said William Hummer, chief economist at Wayne Hummer Investments.

"Our savings rate is understated," he said. "I think it's wrong."

Another argument is that the wealthiest 20 percent of American families account for roughly 40 percent of consumer spending, spending 4.5 times as much as the lowest 20 percent, something Citigroup's chief U.S. equities strategist Tobias Levkovich pointed out in a recent report.

The implication: This group isn't going to run out of money soon. If a healthy economy depends on the wealthiest Americans' continued spending on $200 haircuts and $500 seven-ply cashmere sweaters, we can all rest easy.

His corollary argument is that some of those with the lowest earnings are retirees, who are spending money they've already socked way, so the fact that they spend $18,000 a year but earn only $9,000 should worry no one.

The other side argues that U.S. consumers simply spend way too much.

"The decline in the U.S. personal savings rate and the dearth of internal saving raise concerns for the future," the San Francisco Federal Reserve said in a November note titled "Spendthrift Nation."

To prepare for retirement, "aging workers should be building their nest eggs and paying down debt," the note said. "Instead, many of today's workers are saving almost nothing and taking on large amounts of adjustable-rate debt with payments programmed to rise with the level of interest rates. Failure to boost saving in the years ahead may lead to some painful adjustments in the future. ... "

The note blames "credit-industry innovations (the growth of subprime lending, home-equity loans, exotic mortgages, etc.)" for expanding consumer access to borrowed money and reducing consumers' perceived need for precautionary savings.

It also blames individuals' eagerness to jump into "long-lived bull markets in stocks and housing," which came at the same time nominal interest rates were falling.

"Reminiscent of the widespread margin purchases by unsophisticated investors during the stock-market mania of the late 1990s, today's housing market is characterized by an influx of new buyers, record transaction volume, and a growing number of property acquisitions financed almost entirely with borrowed money," the note said.

Bernard Baumohl, executive director of The Economic Outlook Group, said Americans are increasingly dependent on borrowed money. In 1980, about 78 percent of spending was financed from wages and salaries, he said. By 1990, the figure had dropped to 71 percent and it's been falling ever since. In January, it slipped to 64 percent.

"With borrowing costs on the rise and the wealth effect from real-estate assets diminishing, something has to give," he said.

The federal government's stance is that we should — and will — change our ways.

The Bureau of Labor Statistics, in a report covering the employment and economic outlook for 2004 to 2014, predicted such a change.

"Over the projection period ... the personal savings rate is projected to improve gradually, from 1.8 percent in 2004 to 3.4 percent in 2014," according to the publication.

How? The bureau projects that income will grow at a slower 2.9 percent annual rate between 2004 and 2014, but personal consumption will drop.

While economists wrangle over savings, the White House clearly thinks it's an issue. Vice President Dick Cheney, speaking at a conference on how to encourage people to boost savings and be better prepared for retirement, urged Americans Thursday to do a better job saving.

"The American dream begins with saving money and that should begin on the very first day of work," Cheney said.

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