May 4, 2023 – By Josephine Nesbit
There’s a big dip in Americans’ savings account balances as inflation continues and wage growth slows.
A new JD Power survey revealed bank customers with more than $10,000 in deposit balances at their primary bank declined to 28% from 44% last year, and those with under $1,000 in the bank increased to 30% from 17% year-over-year. A recent GOBankingRates survey also found that 32.9% of adults have no more than $100 in their savings accounts, up from 22% in 2022.
The U.S. Bureau of Economic Analysis noted that the U.S. personal savings rate is below its historical average. The seasonally adjusted annual rate of personal savings was 4.6% in February — down from the average rate of 8%, a 15-year low, reported CNBC.
Personal savings skyrocketed during the pandemic, and households across the country saved as much as 30% of their monthly income. Collectively, Americans had trillions in excess savings, according to Federal Reserve economists. Economists say that most excess savings were concentrated in the top half of households by income, but the lower half built up $5,500 in extra savings per household. Experts believe this stockpile will begin to wane in 2023.
Inflation remains high at an annual rate of 5% in March. CNBC reported that this has impacted consumer spending and devalued savings held in low-return positions, like cash.
Katie Ross, executive vice president for American Consumer Credit Counseling (ACCC), told GOBankingRates that during inflationary periods, Americans should try to increase their savings by a certain percentage to match the cost of daily expenses.
