The Consumer Price Index numbers for June won’t be released until July 13, but the end of this month will provide another indicator of how runaway inflation is altering the spending habits of Americans. On June 30, the U.S. Bureau of Economic Analysis will release the May personal- savings-rate numbers, which have steady declined this year — from 6 percent in January to 5 percent in March to 4.4 percent in April.
Much like the inflation numbers in the Consumer Price Index, we don’t know what the updated personal savings rate numbers will be, but we have a good sense that they will be bad:
Some 70 percent of Americans are using their savings to cover rising prices, a recent Forbes Advisor survey of 2,000 U.S. adults concluded. Among those polled, older adults were more likely to say they have left their savings intact.
In fact, the personal savings rate for April 2022 hit 4.4 percent — the lowest level since September 2008 — down from 6 percent at the beginning of the year, according to the Bureau of Economic Analysis, a department of the U.S. Department of Commerce.
What’s more, one-third of consumers are putting less money into their emergency fund, according to a report from New York Life Insurance, with the average monthly contribution falling by $243. “Millennials are making the most significant cuts, with their monthly emergency fund contributions falling by nearly $289,” the poll of 4,416 adults concluded.
…Though some Americans have built up savings during the pandemic, helped by COVID-related government benefits, those savings appear to be running low as people cope with rising prices.
As bad as inflation seems now, Americans are likely to feel even more squeezed in the months ahead, as they burn through those accumulated savings. Yesterday, CNN’s Capitol Hill correspondent reporter Melanie Zanona characterized Congressional Democrats as “panicked” over inflation and the Biden administration’s response so far:
Democrats, they have been panicking privately. They have been saying for months. Back in December, they started pressing the White House to get a handle on inflation, start talking about this issue. They’ve been pressing Nancy Pelosi, just start putting bills on the floor, even if it’s just messaging votes just to show the voters that they’re doing something.
And when White House officials came, they basically said, blame other people, blame corporate greed, start talking about what we’re doing legislatively to attack these issues. But there was a lot of Q&A, they showed up late. So Democrats do not feel like they’re going back to the districts armed with the necessary talking points and messaging.
Frankly, Democrats should be panicking. Certain unpleasant business cycles run their course and end pretty quickly. But taming inflation took years back in the 1970s. Besides the problem of too many dollars chasing too few goods, the ongoing energy crisis won’t get resolved anytime soon. Historically high fuel prices are expected to last into 2023. The shortage of refinery capacity isn’t going to get solved quickly. There is “no end in sight” for the supply chain crisis. And the federal government is trying to start a slew of infrastructure projects during an ongoing labor shortage and tight supplies of oil, steel, concrete, and other necessary supplies.
Nevermind getting our major economic problems resolved in time for the midterms; now the question is whether Americans will feel much relief in 2023.