Saving Rate Falls to Lowest Since Great Recession

That’s how little income Americans saved in April, the least for any month since the depths of the Great Recession and a clear sign of how hard inflation is hammering household budgets. 

The personal saving rate has been shrinking relatively steadily for more than a year now, suggesting higher and higher prices have eroded people’s financial cushions. In April, it fell to its lowest since September 2008, when the economy was slammed by a housing market crash and financial crisis, data from the Bureau of Economic Analysis showed Friday. Just two years ago, when the pandemic shut down most opportunities to spend money outside the home, it was a record high 33.8%.

The dwindling saving rate underlines just how much inflation running near a 40-year high has forced people into tough choices when it comes to expenses. With everything from food and gas to weddings and trips to the dollar store costing more, setting money aside is harder and harder. That’s especially true for those on the lower end of the income spectrum, and people are now tapping into whatever they stockpiled earlier in the pandemic, when the government was giving out stimulus checks.

“High- and middle-income households still have some savings amassed,” said Diane Swonk, chief economist at Grant Thorton, in a commentary. Lower-income ones “have now tapped what little they had in excess reserves and are struggling to make ends meet. Inequality is worsening.” 

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