Americans Are Out of Savings

By: Anneken Tappe · June 28, 2024 · Reading Time: 2 minutes

Cash Crunch

U.S. bank accounts were flush with savings to the tune of $2.1 trillion following the pandemic. Those savings have now run dry, according to the Federal Reserve Bank of San Francisco . And that’s having a profound impact on consumer spending and the overall economy.

Consumer Contractions

First things first: The reason economists worry about how consumers are doing is because every dollar spent, does its part to growing the economy. That’s why so many analysts have been nervous about whether (and how much) Americans will cut their spending in the face of high inflation.

When inflation first accelerated in 2021, savings helped stem the sticker shock. Even though inflation has come down from its 2022 peak, prices remain high today. And consumers are adjusting: In April, retail sales declined by 0.2%, suggesting a downshift in spending. At the same time, the share of credit card balances delinquent for 90 days or more has pushed to the highest level since 2012, according to the New York Fed .

Major corporations including Target (TGT) and Walmart (WMT) have also acknowledged changes in consumer behavior, including a shift away from discretionary purchases to necessary staples. Walgreens (WBA) unveiled plans to close stores this week, calling consumers “stunned” by higher prices.

Financial Future

So what’s next? Investors, economists, and regular Americans, too, are waiting for the Federal Reserve to cut interest rates and offer some relief to consumers who have to contend with both high prices, and high borrowing costs. As of the first quarter of 2024, U.S. household debt sat at a record high of $17.7 trillion, and while many households are benefiting from higher home and stock values, others are feeling the weight of high rates.

But so far, the Fed hasn’t budged. The central bank raised interest rates to combat the high post-pandemic inflation, but its members continue to note that inflation hasn’t come down as quickly as they had hoped. For the moment, the silver lining of higher interest rates is that people can earn more in their savings accounts.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

Communication of SoFi Wealth LLC an SEC Registered Investment Advisor

SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.


TLS 1.2 Encrypted
Equal Housing Lender