Consumer savings rate plunges to 2.6% as flat income growth and rising energy costs strain household budgets
By
Alex Harring, Deena Zaidi
2d ago· 2 min readenNews
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Summary
Consumer spending rose 0.5% from March to April 2024, but income growth was flat (0%) against a 0.4% forecast. The personal savings rate dropped to 2.6% — one of the lowest levels since the global financial crisis — down sharply from over 31% in 2020. This indicates consumers are depleting pandemic-era savings and taking on more debt to cover expenses, with higher energy costs (linked to the Iran War) adding an estimated $450 more per household on average.
Key quotes
· 4 pulledConsumer spending rose 0.5% from March to April, according to government figures released Thursday.
Income growth came in flat for April, missing the consensus forecast among economists for a 0.4% increase.
The personal savings rate fell to 2.6% in April, one of the lowest readings since the global financial crisis.
It's far off highs seen in 2020 above 31%, signaling that consumers have continued to spend through pandemic stimulus and rainy-day stashes amid inflationary pressures.
Higher energy costs can force consumers to raid their savings and lean more into debt to cover expenses.
