For US Savings Accounts, Another Shift Is Unfolding

Americans who piled up cash during pandemic are now spending it to cope with inflation
By John Johnson,  Newser Staff
Posted Jul 5, 2022 9:10 AM CDT
Updated Jul 9, 2022 5:10 PM CDT
A Broad Economic Trend Is Unfolding
A customer holds a credit card at the pay-at-the-pump gasoline pump in Rolling Meadow, Ill.   (AP Photo/Nam Y. Huh)

The dry details from a spate of economic reports and financial surveys add up to changing narrative in regard to American's savings accounts: People piled up unusually large stores of cash during the pandemic, but they're now spending it to cope with inflation. Details:

  • The personal saving rate fell to 5.4% in May, below the average of the last 10 years and a far cry from the staggering rate of 34% clocked in April 2020, reports the Wall Street Journal.
  • Americans accrued $2.7 trillion in extra savings from the pandemic's start through 2021—thanks to factors such as stimulus checks and an inability to go out and spend money—but they have now spent about $114 billion of that, per the Journal, citing stats from Moody's Analytics.

  • Two-thirds of Americans say they are now dipping into their savings accounts because of the rising costs of, well, everything, reports Forbes. Its survey also found that 8% of people have entirely wiped out their savings, 23% have spent a "substantial" portion, and 36% of have spent what they consider to be a small portion.
  • Nearly 60% of Americans currently feel uncomfortable with their "emergency" savings fund, up from 46% two years ago, reports MarketWatch, citing a Bankrate survey. It's worst for millennials, with 62% of them worried, compared with 59% of Gen Xers and 51% of baby boomers.
  • Broadly speaking, checking account balances are still above where they were in 2019, per the Journal. In fact, the balances of the lowest-income families remain about 65% higher today. The question is how long that will remain the case. “Most households have a cash cushion to navigate through the very high inflation,” says Moody's analyst Mark Zandi. “This is allowing consumers to stay in the game.”
(More savings stories.)

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