Dec 2, 2022 - Economy

Savings rate plunges to lowest level since 2005

Data: Bureau of Economic Analysis via FRED; Chart: Axios Visuals
Data: Bureau of Economic Analysis via FRED; Chart: Axios Visuals

Americans are spending most of what they're earning these days. The savings rate in October was the lowest since 2005 — and the second-lowest on record, according to data from the Commerce Department released Thursday.

Why it matters: Thanks to higher prices and a return to "normal" life that has folks traveling and going out again, Americans are spending more and saving less.

  • And for now, many are sitting on a lot of savings — so they don't need to sock as much money away.

Zoom out: A lot of folks built up a big cash cushion over the past couple of years (note the big spike in the chart above) but with inflation trending higher than wage increases, at some point, something's got to give.

  • "Americans’ cash war chest has been dwindling, and the spending extravaganza cannot last," writes Kroll's global chief economist, Megan Greene, in the FT.
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