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The savings rate looks pretty darn bad right now

endlessmetrics.substack.com

The savings rate looks pretty darn bad right now

Low and probably dropping lower

Luke M
Jun 23, 2022
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Share this post

The savings rate looks pretty darn bad right now

endlessmetrics.substack.com

One of the benefits of the COVID lockdown era was an increase in the personal savings rate:

However, it’s hard not to notice how quickly that savings rate is trailing off. In fact, the rate in April was the worst level since the Great Recession.

Worse than the level is the trend - it’s going down fast! That shouldn’t be a big surprise. People are not only spending at above average rates but price growth has been outpacing wage growth.

What this boils down to is an unhealthy trend. People should save at a reasonable rate and we are quickly dropping below those healthy levels, which will only stand to weaken consumers long term. And, weak consumers will mean a weak economy.

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The savings rate looks pretty darn bad right now

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