How much capital can be accumulated depends on how much society is willing and able to set aside and forego in the way of current consumption to make funds available for investment. The household sector or personal saving has been the principal source of saving for the U.S. economy. However, throughout the 1980s and 1990s, personal saving declined precipitously. During the last half of 2000, personal saving was continuously negative. While depreciation provides for replacement of worn out capital, retained earnings provide for new capital.
Businesses can draw on foreign saving to finance new capital.
If the recent expansion is to continue, the U.S. needs to increase its domestic saving rate.