The trillions in excess personal savings built up in the pandemic are beginning to vanish amid high inflation, according to Federal Reserve economists. The monthly saving rate fell to a 15-year low in 2022. It started a recovery in 2023, but remains well below long-term trends. Despite this slowdown in saving, consumer spending has remained robust, keeping the U.S. from recession.
“Something like $2 [trillion] to $2.5 trillion above what we would have otherwise expected were saved by American households,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions.
Collectively, Americans have trillions in excess savings compared with expectations leading up to the pandemic, according to Federal Reserve economists.
Watch the video above to learn about how the personal savings rate affects you and the wider economy.
Chapters:
00:00 — Introduction
01:26 — Budgets
02:40 — The personal saving rate
05:33 — Recession?
07:48 — Ways of saving
Produced by: Carlos Waters
Edited by: Nora Rappaport
Animation: Jason Reginato
Supervising Producer: Lindsey Jacobson
Additional Footage: Getty Images
Additional Sources: Federal Reserve Board of Governors, Organisation for Economic Co-operation and Development, U.S. Bank
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Where Did Americans’ Savings Go?…(read more)
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Over the past few decades, Americans have shifted their financial priorities towards consumption and debt, resulting in a decline in savings rates. This trend has led to many people wondering, “Where did Americans’ savings go?”
One major factor contributing to the decline in savings is the rise of consumerism. Americans have become accustomed to a culture of spending, with shopping and material possessions being considered essential to a fulfilling life. The rise of e-commerce and social media has also fueled this trend, making it easier than ever for people to constantly purchase new items and keep up with the latest trends.
In addition to consumerism, debt has also played a significant role in the decline of savings rates. Americans hold an overwhelming amount of debt, including credit card debt, student loans, and mortgages. This high level of debt often leaves little room for saving and investing.
Another factor is the growing income inequality in America. The wealth gap has widened over the past decade, making it difficult for lower-income families to save money. Many people are living paycheck to paycheck, struggling to make ends meet and barely keeping up with their bills.
The Great Recession of 2008 also had a significant impact on savings rates. Many Americans lost their jobs or saw their incomes decline, making it difficult to save money. The economic uncertainty of the recession also led to a decrease in consumer confidence and spending.
So, where did Americans’ savings go? In many cases, they simply never existed. For many people, saving money is not a priority, and they may not have the financial knowledge or resources to do so. Others may struggle with high levels of debt or lack of income, making it difficult to save.
To reverse the trend of declining savings rates, Americans need to prioritize financial education and responsibility. This includes learning proper budgeting techniques, reducing debt, and investing in their future. It also means shifting away from a culture of excessive consumerism and focusing on building a healthy savings account.
In conclusion, Americans’ savings have largely disappeared due to a culture of consumerism, high levels of debt, income inequality, and the impact of the Great Recession. To rebuild savings rates, individuals must prioritize financial responsibility and education, and work towards reducing debt and investing in their future.
I've been saying more then ever. Pandemic time showed me that a lot of the stuff I was spending on i don't need to be spending on.
Its always been like this. Watch some YT vids from the 80's when unemployment was 10% Same setup. Banks dont pay anything but can rent your money out 10 fold for every dollar. If you a wage worker it will always be like this. People live in their credit score their whole life with no tangible cash ever. The rich just run away generationally over time. The working poor are the liquidity int he economy, they are never supposed to keep it. They pay for all the "social programs" Rich can hire lawyers and have the best tax people to tuck money away while the Govt wants all of it. The Poors got nowhere to run or finesse money away.
What a silly question! It all went into rich people's offshore bank accounts, obviously. Where else could it have gone? It didn't just vanish. Rich people are determined to keep all the money, even if it kills us.
Which it will.
Our savings went to bufu Egypt because our "money" is government debt notes and not real money
Why put in a CD when Ibonds are offering more. Saving should be used for emergency cash. Investing in mutual funds and the market is the way to build more money.
Its gone straight to politicians wallets end story
Dave Ramsey bs 7
I saved up about 40k, 35 and still struggling to find a home to buy. My parents bought their first home at 25….
It’s because the government takes half and inflation is a stealth tax and inflation is caused by governments overspending and stimulus
Basic necessities increased due to greedflation.
Americans might more savings than before but what about inflation
We Are in Unchartered Financial Waters! every day we encounter challenges that have become the new standard. Although we now acknowledge it as the new normal and must adapt accordingly. Given the current economic difficulties that the country is experiencing in 2023, how can we enhance our earnings during this period of adjustment? I cannot let my $480,000 savings vanish after putting in so much effort to accumulate them for my retirement.
You cant save money if you never had money. Living pay check to pay check.
Y’all need more Caleb Hammer in your lives..
At the core of it all is corporate marketing and the lack of financial education. Emotional intelligence!!! American companies constantly hammer consumer-based lifestyles and people spend more than they make, all while not educating people about their spending. So of course it's hard to save. Just like trying to loose weight while eating cake and sweets all day. The average person overspends and does not see it as important to save as they should so times like these seem so difficult and impossible.
Evil/stup!d boomers will say “those darn young kids are just lazy and need to get a job”
Considering the economic downfall and the rise in poverty across the globe. I ask; What’s the best way to achieve financial freedom?
Certainly! I understand that living expenses and taxes can take up a significant portion of one's income in the UK, which can limit how far that income can go. Even 100k doesn't get you very far. So, what do you believe defines a person as being 'rich'? Is it simply being able to live comfortably above the standard and being financially secure, or does it also include having the ability to pursue expensive hobbies and travel frequently?
Who comes up with these numbers? Talk to any American and 9/10 are struggling. Actually it's more like 9.9/10.
It’s not.
The monopolies have been stealing money from citizens in the USA. Not enough competition in the markets. It's called corporate inflation. I live in Chile were the economy has been dominated by oligopolies/ monopolies and these bad business practices have put a huge percentage of Chileans into debt. Almost nobody has savings here. Chile's economy is dominated by right wing conservative ideas . Its what the Republicans want for The USA. And the USA is heading in that direction with large businesses converging into monopolies and then these large oligopolies charge high prices .
Maybe people should stay out of credit card debt and stop getting 700$+ car payments. It’s not hard to save when you don’t send all your money to the bank
It's the same as fitness, in vs. out. If you eat 5000 nutrients void calories a day and do nothing you will get fat. If you earn $1000 a week and buy a $75,000 Dodge Hellcat with a $1200 payment and Doordash every meal you will be broke.
Saving money.
Due to inflation high gas and food prices and interest rates
Signs of a narcissist is instantly posting how much is in your account
Us citizens become new venezuela!!
Understanding personal finances and investing will most likely lead to greater financial independence. By being knowledgeable about money and investing, individuals can make informed decisions about how to save, spend, and invest their money. A trader made over $350k in this recession influenced market
Its this simple people…….if you are over the age of 30 and haven't saved enough money to go SIX FULL MONTHS without making an income and still be able to pay your bills, you have done something TERRIBLY wrong. You dont need a thousand dollar cell phone, you dont need a new car, you dont need to eat out AT ALL. You dont need name brand clothes and accessories, yet all of these things are the MAJOR contributors to why people are BROKE. So stop WHINING and start living within your means.
Guys the american dream is dead lol
I left the country 4 years ago
And my savings increased 10x
Housing & food
I don't hear anything about how fast the financial sectors crash, how you don't get your money back if your bank crashes (and I don't think there's going to be any government money to pay anyone for their losses when it all collapses – globally), how going to digital currency makes your cash worthless, how stocks/retirement plans become worthless when businesses go bankrupt, etc. It is really a hard time for anyone to survive financially or save for a troubled future.
In my own search for answers, it seemed like the only way to make your money work for you now and with inflation is to buy the things you will need as prices increase — as many things as you can… like non-perishable food, planting a garden to grow as much of your food as you can, paying ahead in places you can – like rents and mortgages and utility bills. I tried to find out if taxes could be paid ahead and was told that is not an option.
At one point I started saving money in Gift Cards that could be reloaded. It doesn't help with inflation, but it allows you to put money aside at the stores you always shop or would need to shop in the future. I thought a Walmart Gift Card would cover most everything, but now they have closed all the stores in my area — and that is a BAD sign about the economy.
My only income is less than $500 in Social Security Retirement Benefits and SNAP Food Benefits that currently is below $300. I live in fear that the government will finally hit the bankruptcy moment and I will have nothing to live on. Social Security is already a credit transaction I believe.
In my view, this all seems like bad choices but I know the global governments are trying to force digital currency on us… because of their own financial situations. As a Christian I have realized that the financial microchip that has already been developed could (will) be added to digital currency and create the "Mark of the Beast" in Biblical prophecies. That makes everything look different.
Smart lady!
Bad loan debt on useless degrees and new car loans.
The answer: "The interest burned it."
You can't save any money cause you working just to pay rent
Don’t know where this level of reporting has been the past 10-15 years. Housing alone has been skyrocketing while cost of living in general has gone up. What irks me is that most media outlets use the monthly jobs reports as the overall indicator of economic health while so many other variables are overlooked.