Country’s Rate of Saving Is Now the Lowest in Years

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That’s the last time the country saved as little disposable income as it did in January, showing that household finances are running on thinner margins these days, as higher prices and a renewed motivation to buy boost consumer spending.

After paying taxes and making purchases, Americans saved just 6.4% of their income in January, the Bureau of Economic Analysis said in its monthly report Friday. That’s the lowest saving rate we’ve had since December 2013, and far below the record high of 33.8% reached early on in the pandemic, when widespread job losses made people reluctant to spend, and business closures and stay-at-home orders left them with few places to shop even if they wanted to. 

Elevated saving rates illustrate one of the oddities of the pandemic economy: Despite all the upheavals, as a whole, personal finances have been pretty healthy. Stimulus checks, unemployment benefits, and other government relief have bolstered bank accounts, as have rising wages—a symptom of the high demand for workers. 

But with those relief programs over, and inflation taking its toll, that could be changing. The decreased saving is a warning sign for household budgets as oil supply disruptions from the war in Ukraine threaten to drive up gas prices and worsen inflation, which is already running at its highest in nearly four decades.

“Households have little cushion to fall back on if we see a further spike in gasoline prices linked to Russia's full-scale invasion of Ukraine,” Paul Ashworth, chief U.S. economist at Capital Economics, said in a commentary.

The January saving rate fell as spending increased more than in any month since last March, even after adjusting for the impact of inflation. At the same time, income was virtually flat because rising wages and a Social Security cost-of-living adjustment were canceled out by the end of payments from the child tax credit expansion.

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  1. Bureau of Economic Analysis. “Personal Saving Rate.”

  2. Bureau of Economic Analysis. “Personal Income and Outlays, January 2022.”

  3. FRED | St. Louis Fed. “Personal Saving Rate (PSAVERT)."

  4. Federal Reserve Bank of Kansas City. “Savings Surge During the Pandemic.”

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