Americans Continue Spending As Savings Rate Falls To Lowest Level Since 2022

Americans saved less money in April as consumer spending increased and inflation remained elevated, according to data released Thursday by the U.S. Bureau of Economic Analysis.

The personal saving rate fell to 2.6% in April, while personal consumption expenditures increased by $111.1 billion, or 0.5%. Disposable personal income declined by $19.9 billion, or 0.1%, during the month. Personal savings totaled $611.7 billion in April.

Inflation Squeeze

The Bureau of Economic Analysis reported that the Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation gauge, rose 3.8% from a year ago in April, the highest level since May 2023. Core PCE, which excludes food and energy, increased 3.3% on an annual basis.

Higher energy, housing and food costs have remained key drivers of inflation, adding pressure to household budgets as wage growth struggles to keep pace.

Consumer spending continued to rise despite higher prices. Spending on services increased by $67.2 billion, while spending on goods rose by $44 billion during the month.

The latest data suggests consumers continued spending even as inflation remained elevated and disposable personal income declined during April.

Pressure On Households

The savings decline comes as several indicators point to growing financial pressure across U.S. households. Recent research from the Federal Reserve Bank of New York found that more lower-income families are struggling with food affordability, relying on assistance programs and dipping into savings to cover everyday expenses.

The report described the trend as part of a “K-shaped economy,” where higher-income households continue benefiting from rising asset values while many lower-income Americans face mounting cost pressures.

Consumers also continue to face elevated costs across several essential categories. While gasoline prices have eased from recent highs, the national average remained above $4.39 per gallon this week, according to AAA data, well above year-ago levels.

Signs of stress have also emerged across consumer finances. Recent data showed credit card delinquencies climbed to their highest level since 2010, while student loan and auto loan delinquencies also increased. Separately, retirement providers have reported a rise in hardship withdrawals from 401(k) plans as more workers tap long-term savings to cover medical expenses, debt payments and other financial emergencies.

The latest Bureau of Economic Analysis data showed personal income was little changed in April, even as consumer spending increased, suggesting many households continue to face pressure from elevated living costs and persistent inflation.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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