5 things to know about declining savings, rising debt for American households

1. Increase during pandemic. The personal saving rate, which is the percentage of disposable income people save, rose to 33.8% in April 2020 as federal checks for COVID-19 relief and enhanced unemployment compensation bolstered income.

Credit: Alexis Larsen

Credit: Alexis Larsen

2. Coming back down. The personal saving rate dropped to 4.6% in May, far less than the 9.3% pre-pandemic rate in February 2020.

3. Debt rising. Total household debt increased by $148 billion, up 0.9%, to $17.05 trillion in the first quarter of 2023, according to the Quarterly Report on Household Debt and Credit published by the Federal Reserve Bank of New York in May.

Credit: Alexis Larsen

Credit: Alexis Larsen

4. Not prepared for unexpected costs. Fifty-two percent of adults surveyed said it would be very difficult or somewhat difficult to pay an unexpected bill of $1,000 right away, according to a Quinnipiac University survey released in June.

5. Inflation easing. Consumer spending fueled inflation, which led to higher costs for consumers and led the Federal Reserve to raise interest rates in an effort to beat inflation. In June inflation was 3% year-over-year, the lowest since March 2021, according to the U.S. Bureau of Labor Statistics.

Credit: Alexis Larsen

Credit: Alexis Larsen

SEE MORE: The Dayton Daily News Path Forward project seeks solutions to the most pressing issues facing our community. This two-day series examines the problem of rising consumer debt and declining savings and looks at what resources are available to help.

Sunday: After saving an extra $2 trillion during the pandemic consumers are spending down savings and going into debt.

Monday: Local help available for people in debt and those trying to avoid it

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