The Personal Savings Rate is at Great Recession Levels

by Martin Armstrong

Saving money has become impossible for many amid 40-year high inflation. According to data from the US Bureau of Economic Analysis, the personal savings rate reached 4.4% in April after steadily declining from the 6% level seen in January. This marks the lowest rate on record since September 2008 amid the Great Recession.

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People hoard and save when they are pessimistic about the future. That innate desire to save is not possible with inflation at 8.3%. For example, in April 2020, the lockdowns began to take a stronghold on the US. People were losing their jobs, basic necessities such as toilet paper were in short supply, and no one knew when life would return to normal (spoiler: it never will). Fears were high, but inflation was only 4.2%. The personal savings rate at that time reached a historical high of 33.8%, partially due to government handouts, social programs, and payment moratoriums.

People can hardly save with the current cost of living. If the economy continues to slide into a recession, survival will be the main concern rather than saving.


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