Americans' personal savings have collapsed by an eye-watering $5.5 trillion between April 2020 to July 2023, thanks to soaring inflation -- and that could spell trouble for the economy. The article says the US economy has held up remarkably well this year, defying recession predictions, thanks to all the money Americans saved during the pandemic when they weren't spending, and that this has provided a cushion to consumer spending. But that extra money in people's savings is going to run out soon, and then they'll be likely to pull back from the current higher spending levels. A $5.5 Trillion Savings Wipeout Is Raising Risks for the US Economy (businessinsider.com)
It looks like consumers may be sustaining their purchases by taking on more debt. This following information comes from three articles about how credit card debt has gone up. U.S. credit card debt reaches all time high, exceeds $1 trillion U.S. credit card debt increased by $45 billion from Q1 2023 to Q2 2023 leading to a new all-time high. Nearly 50% of cardholders carry debt from month-to-month, up from 39% in 2021. U.S. credit card debt reaches all time high, exceeds $1 trillion, Steve Dashiell, Bankrate.com, August 09, 2023 The average credit card debt has gone up to $5,733 per cardholder. The Federal Reserve reports that the average credit card interest rates are 20.68% in 2023. (That's $1000 annual interest payments on every $5,000 of debt) For small businesses, the median credit card debt not paid by the end of the month was $7,000, as of 2022, according to data from JPMorgan Chase. Average credit card debt is on the rise for Americans in 2023, by Joseph Hostetler, Fortune (magazine), November 22, 2023 The personal savings rate -- how much people save as a percentage of their disposable income -- was 3.9% in August, well below a decades-long average of roughly 8.9%, according to the latest data from the U.S. Bureau of Economic Analysis. More than one-third of adults now have more credit card debt than cash reserves, which is the highest on record. Savings rate for Americans is falling. 'I'm concerned,' top economist says, Jessica Dickler, CNBC, Oct 3, 2023
