By Maxwell Newman From Newsmax

Across all income levels, Americans are dipping into savings they accumulated over the pandemic, as rampant inflation continues to outstrip wage gains.

The $2.7 trillion in savings that Americans amassed, with many locked down inside during the pandemic, is now slowly, but surely, being eaten away by rising prices.
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“Inflation endangers Americans’ wallets, impacting larger swaths of the population than even joblessness.”
— Sarah Foster, Bankrate Analyst
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The personal savings rate last month stood at 5.4%, far below the record high of 34% in the early days of the pandemic in April 2020, and families have used about $114 billion of pandemic savings, Moody’s Analytics reports.

As a potential recession looms, more Americans are anxious about their emergency savings, and the personal savings rate has fallen to its lowest level since the 2008 recession. Despite this, Mark Zandi, Moody’s chief economist says, “Most households have a cash cushion to navigate through the very high inflation. This is allowing consumers to stay in the game.”
 

Robust Savings Gone  

While this is encouraging, The Wall Street Journal notes that personal savings rates were higher and less volatile in the past, with the personal savings rate hitting 7% in July 2019, the last year before a pandemic resulting in stimulus checks, only for benefits to end last year, leaving millions in a state that some economists describe as akin to a financial cliff. 

One example of this is 24-year-old industrial engineer Darius Johnson, who is considering using some of his savings in his investment account, worth over $5,000, to pay off a credit card balance if his income cannot cover it. The potential end of a moratorium on student loan payments has Johnson, like many other recent college graduates, nervous as well.

In a related report from Bankrate, nearly three in four Americans, 73%, are worried about “new or continued price increases on everyday essentials over the next year.” Eighty-one percent notice higher grocery prices, along with a respective 73% and 57% aware of rising gas and restaurant prices over the past year.

Sarah Foster, a Bankrate analyst, says “inflation endangers Americans’ wallets, impacting larger swaths of the population than even joblessness. There aren’t many places consumers and businesses can hide from inflation, but there are important steps that they can take to at least blunt the blow until price pressures eventually — and hopefully — alleviate.”

With inflation persisting, with little end in sight, it appears Americans, who are both increasingly digging into their emergency savings and uncomfortable with their savings accounts, are stuck. With stagflation more likely on the horizon than a recovery, the economy looks especially grim.

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