Get All Access for $5/mo

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.

By Amanda Breen Edited by Jessica Thomas

Westend61 | Getty Images

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

Senior Features Writer

Amanda Breen is a senior features writer at Entrepreneur.com. She is a graduate of Barnard College and received an MFA in writing at Columbia University, where she was a news fellow for the School of the Arts.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Devices

Maintain Professional Boundaries with a Second Phone Number for $25

Keep your business and personal communications separate with Hushed—and save an extra $5 for a limited time.

Starting a Business

How to Find the Right Programmers: A Brief Guideline for Startup Founders

For startup founders under a plethora of challenges like timing, investors and changing market demand, it is extremely hard to hire programmers who can deliver.

Business News

How Nvidia CEO Jensen Huang Transformed a Graphics Card Company Into an AI Giant: 'One of the Most Remarkable Business Pivots in History'

Here's how Nvidia pivoted its business to explore an emerging technology a decade in advance.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

Want to Start a Business? Skip the MBA, Says Bestselling Author

Entrepreneur Josh Kaufman says that the average person with an idea can go from working a job to earning $10,000 a month running their own business — no MBA required.