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US Personal Savings Hit Historic Low, but the Bottom Is Still Far Away

Neil Campbell
Neil lives in Canada and writes about society and politics.
Published: January 13, 2023
The 2.2% US Personal Savings Rate not seen since 2005 GFC still hasn't bottomed.
A January of 2019 file photo of a chocolate piggy bank and its chef in Taipei, Taiwan. As recession fears exacerbated after the U.S. Personal Savings Rate statistic hit a low not seen since 2005, data shows the race to the bottom still has a long way to go. (Image: SAM YEH/AFP via Getty Images)

The disposable income of U.S. citizens hit a low not seen since 2005 in November, another clip of data worrying some analysts that a meaningful recession and even a potential depression is on deck.

Yet, the bottom is nowhere in sight as data shows the situation still has a long way to deteriorate before more than America’s lowest earners are truly impacted. 

A December data dump by the Bureau of Economic Analysts for the period of November of 2022 found that the personal savings rate had plummeted to 2.4 percent, a small improvement over October of 2022’s 2.2 percent, the lowest rate posted since 2005 as the factors that ultimately drove the unfolding of the 2008 “Great Financial Crisis” reached their pinnacle.


The BEA defines the datapoint in the following way: “The U.S. personal saving rate is personal saving as a percentage of disposable personal income. In other words, it’s the percentage of people’s incomes left after they pay taxes and spend money.”

The figure was never lower than 5 percent since 2010, and briefly spiked as high as 30 percent during the distribution of Coronavirus Disease 2019 (COVID-19) helicopter stimulus funding and lockdowns that left people with nowhere to go and nothing to spend money on.

A December article published in the Indianapolis Business Journal succinctly explained, “The rate spiked to an all-time high of 33.8% in April 2020 amid stay-at-home orders and an initial $1,200 stimulus check that was issued to eligible Americans that month. The savings rate dipped back below 10% beginning in mid-2021 and has been below 5% all this year. October’s rate dipped to 2.3%, its lowest level since July 2005, when it was 2.1%.”

Bloomberg reported that BMO Capital Markets analyst Sal Guatieri told clients in an early December note that the ensuing collapse results from consumers being forced to liquidate their gifts in the face of 2022’s 7+ percent basic inflation, record gas prices, and skyrocketing mortgage payments as the Federal Reserve raised interest rates from 0.25 to 4.5 percent over the course of 2022.

Guatieri warned clients that there’s still enough meat on the bone to prolong the advent of demand destruction from wiped out consumer spending reserves, “This extra piggy bank could last another year, also underpinning consumption,” he stated.

And this point is perhaps best encapsulated in the Federal Reserve’s Checkable Deposits and Currency data for households and nonprofits, which shows the sector holding more than $1.4 trillion in Q3 2022, almost doubling the $763 billion in Q3 of 2021.

The BEA’s data accompanying the savings rate also shows that ultimately, disposable personal income is still trending upward at $18.63 trillion in Q3 2022 compared to $17.6 trillion in 2020

But as reports throughout 2022 emerged of topics, such as consumers being so strapped for cash to pay for basic necessities such as gasoline and groceries that pawn shops were fielding unprecedented demand and a snowballing overall credit card debt statistic, someone is obviously hurting.

And that someone is likely the lowest income earners, according to a July of 2022 Bloomberg report, which pointed out that based on Federal Reserve data, the only quintile of the economy whose savings were actually shrinking was the bottom 20 percent.

The article stated that although checkable deposits were still on their way up, the only beneficiaries were the toppest two quintiles, “But roughly two-thirds of the increase went to the highest-earning 10% of households, and one-third to the top 1%.” 

“For the 26 million households at the bottom, the gains in cash holdings have already been wiped out,” they noted. 

And just how large is the contrast between the lowest quintile hitting the pawn shops and food banks and the highest earners?

A Jan. 9 Press Release issued by Rolls-Royce perhaps says it all.

Titled Historic Sales Record Completes Landmark Year For Rolls-Royce Motor Cars, the icon of the world’s ultra-elite was pleased to announce that 2022 was its best ever year, delivering 6,021 cars, an 8 percent increase over 2021.

“This is the first time in the company’s 118-year history that its sales have exceeded 6,000 in a single 12 month period,” the company stated.

Not only was sales volume up, but so was additional spending.

“But as a true House of Luxury, sales are not our sole measure of success: we are not and never will be a volume manufacturer,” the Release read.

The company continued, “Bespoke IS Rolls-Royce, and commissions were also at record levels last year, with our clients’ requests becoming ever more imaginative and technically demanding – a challenge we enthusiastically embrace.”

Adding, “The unrivalled Bespoke creativity and quality achieved by our team here in Goodwood means that on average, our clients are now happy to pay around half a million Euros for their unique motor car.”

Rolls-Royce earned the highest value of Bespoke commissions across its entire 118-year history, they said.