Americans Aren't Saving Money Right Now — and It's Not Just Because of Inflation

Dwindling savings could mean trouble for many Americans as the threat of a recession looms.

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By Amanda Breen

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Though many Americans' savings accounts gained some extra padding during the Covid-19 pandemic with stimulus checks and fewer opportunities to spend, there's reason to believe those reserves will run dry soon.

Even with the threat of a recession on the horizon, Americans are spending more than they're saving, and it has as much to do with resilient consumer habits as it does inflation, Insider reported.

Related: Facebook Marketplace Scam Costs Michigan Woman Life Savings

According to a report from the Bureau of Economic Analysis, the personal savings rate, or the amount of income Americans' set aside each month, dropped to 2.3% in October.

Americans' dwindling savings can be attributed to inflation in part. Despite the Federal Reserve's efforts to battle inflation by raising interest rates, price pressures remained high in November, CNN reported.

And earlier this year, a survey from the Pew Research Center found that Americans view inflation as the top problem facing the country today.

But strong consumer spending also plays a significant role in decreasing savings. Consumer spending soared ahead of the holiday season, rising 0.5% in October from September — the largest jump since January, The Wall Street Journal reported.

Related: How Generation Z Can Jump-Start Savings (Advice Anyone Can Use)

Americans who haven't set enough money aside will find themselves in a difficult spot if the U.S. does enter a recession next year.

Amanda Breen

Entrepreneur Staff

Features Writer

Amanda Breen is a features writer at Entrepreneur.com. She is a graduate of Barnard College and recently completed the MFA in writing at Columbia University, where she was a news fellow for the School of the Arts during the 2020-2021 academic year. 

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