I’ve been watching the U.S. consumer savings rate climb. It’s been heartening to witness the ascent past 5% on its way to perhaps 7%. Any way you look at it, this is a welcome—if not critical—change in our financial/economic behavior.

I started digging into how this rate is computed and asked a few of our resident economists for some explanation. As a result, I don’t feel quite as good about the savings rate as I did, but I understand the basis for it much better.

From a macroeconomic perspective, savings comprise after-tax disposable income minus consumer spending. For example, if the ratio of consumer spending to personal income fell from 98% to 95%, the savings rate in an economic sense would increase from 2% to 5%. Economists look to the sources of income—how much income is in excess of spending—not the uses of it.

In essence, “savings” can only go three places: toward paying off debt (deleveraging), for investment, or into cash reserves. So when you hear about savings rates climbing, it doesn’t necessarily mean consumers have additional liquid assets in their bank accounts or that they’re investing more. Increased savings could be primarily used to reduce leverage—something that raises one’s overall net worth but doesn’t increase liquid assets. It’s a form of savings, to be sure, but not quite in the way consumers typically understand it.

There is evidence that consumer debt ratios are coming down. The ratio of homeowner household debt service payments and financial obligations to disposable personal income (“consumer FOR,” or financial obligations ratio) dropped from 17.58 in the first quarter of 2008 to 16.36 in third-quarter 2009. Just 20 years ago, the ratio was 13.40.

Once excessive debt levels have been dealt with, let’s hope consumers actually increase what we all think of as savings and don’t slip back into their old habits.