Americans are saving less these days. Here’s why and what that means
CNN
Americans haven’t been stashing money into their savings accounts like they used to, according to government statistics. That’s part of the reason why consumer spending has been so robust since the economy ascended from pandemic depths, despite high inflation and elevated interest rates. But when saving slows (or stops), it puts households in a vulnerable position, especially those with low incomes, economists say.
Americans haven’t been stashing money into their savings accounts like they used to, according to government statistics. That’s part of the reason why consumer spending has been so robust since the economy ascended from pandemic depths, despite high inflation and elevated interest rates. But when saving slows (or stops), it puts households in a vulnerable position, especially those with low incomes, economists say. The personal saving rate fell to 3.6% in February, the lowest level in more than a year, and in recent years it has hovered below levels seen in the decade before 2022. That may just be a continuation of a long-term trend: Americans “have consistently saved less in the aftermath of each recession than they did in the prior cycle,” according to an analysis from Wells Fargo economists released Thursday. The only exception over the past 50 years in which people actually saved more than they did in the prior cycle was during the economic expansion after the Great Recession, which stretched from 2009 to 2020, the analysis said. That reflected the sheer economic pain Americans felt during the 2008 downturn. The dynamics at play now are vastly different. Americans saw their coffers swell thanks to pandemic-related stimulus and not spending during shutdowns. The robust job market of recent years has also supported household finances. Put together, this may have resulted in “a structurally lower saving rate,” according to the report. Before the Bell spoke with Shannon Seery Grein, an economist at Wells Fargo and one of the authors of the report, on what recent savings behavior means for the US economy.
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