The US personal savings rate decreased to 3.7% in 2022, according to data, despite the current extreme macroeconomic pressure on the nation’s financial outlook. The aforementioned statistics are also the lowest since 2007.
The savings rate in the US is regarded as a reliable indicator of the country’s disposable income. It might also be taken into account when determining how well-rounded an economy is. In light of this, the most recent data for 2022 paints a bleak picture of what it implies financially for the US.
US Personal Savings Decline
The American economy has undoubtedly been a topic of discussion so far in 2023. The Federal Reserve’s year-long battle against inflation is notably fueled by the current macroeconomic environment. Furthermore, any economic decisions made on Capitol Hill continue to be overshadowed by the problem of the national debt.
Additionally, the most recent facts that have surfaced represent the nation’s economic vulnerability from a citizen’s perspective of the previous year. It was also important to note that in 2022, the US personal savings rate was seen to have fallen to 3.7%, the lowest level since 2007.
Finder published the stats for the US personal savings statistics. The aforementioned data have addressed the figure’s unparalleled position in 2022. Additionally, it was noted that “disposable income is only slightly improving in 2023 after approaching historic lows in 2022.”
It’s also important to note that by February 2023, it was estimated that Americans were saving 4.5% of their disposable income. When compared to US citizens’ savings of up to 17% of their disposable income in 2020, this was incredibly low.
Personal savings are reportedly defined by the US Bureau of Economic Analysis as available funds left over after paying expenses, obligations, loans, and taxes. This information demonstrated that the average American is experiencing the effects of inflation.
The Recent Declines
Recent research has shown that American consumers typically do not drastically alter their spending or saving habits. Reports have suggested that a thorough understanding of the data offered by the most recent statistics can be achieved by looking back in time.
The last time the savings rate was this low was in 2005; at that time, it was part of a longer-term trend. From 1998 to 2004, rates were an average of roughly 5.4%, and from 2005 to 2007, they decreased by 3.3%. This means that the 2.1% rate observed in July 2005 belongs to a phase of low savings rates.
Additionally, it has been noted that Americans have been conserving more of their disposable money in recent years. By 2019, right before the pandemic constricted expenditure, the savings rate was estimated to have averaged close to 9%. This caused savings to increase dramatically.