Data demonstrating how inflation has eaten into rainy-day money expose President Biden’s assertion that Americans are saving more since he began office as a deception.
According to recent data from the Federal Reserve Economic Data (FRED), the average American had just 5.4 percent of their earnings left over after covering living expenditures in May of this year.
The National Personal Savings Rate is that amount.
It is currently far lower than the record-breaking percentage of 33.8% set in April 2020. Additionally, it is less than the average monthly saving capacity of Americans during the previous ten years.
Prior to the May number, the lowest National Personal Savings Rate over the past ten years was registered in January 2013, when it reached 5.6%.
Americans have collected $2.7 trillion in savings by the end of 2021. Since then, they have spent around $114 billion of that enormous stockpile of cash, leaving just under $2.5 trillion in savings.
The statistics contradict Joe Biden’s May statement that “Families have raised their savings and have less debt since I took office.”
Given the enormous amount that Americans currently owe on credit cards, Biden’s assertion regarding debt is equally tenuous.
The total amount of credit card debt increased by 20% in April to $1.103 trillion. Prior to the epidemic, this record stood at $1.1 trillion.
According to a poll by asset management business Northwestern Mutual, Americans’ savings accounts have also decreased by more than $9,000 over the previous year, from $73,100 in 2021 to $62,086 in 2022.
Millions of Americans received significant unemployment benefits during the first 1.5 years of the COVID pandemic, frequently exceeding their salaries, as well as thousands in stimulus payments.
a student debt and rent Holidays mandated to prevent people from being homeless helped finances even more; so did the fact that so many entertainment and leisure alternatives were closed, leaving less money to be frittered away.
The spike in living expenses, according to Moody’s analysis, was one of the factors contributing to the savings dip, as was first reported in the Wall Street Journal.
To pay for rising food, gas, and electricity costs, many Americans are being forced to draw from their personal savings.
The cost of leisure pursuits like trips and dining out has also skyrocketed.
According to economists, the vast amount of savings is protecting many Americans from the harshest effects of inflation.
In the year ending in May, it increased by approximately 8.6 percent as gas prices again hit record highs.
Data from the Federal Reserve reveals that since Biden assumed office in January 2021, household debt has climbed by more than $1.5 trillion.
President Joe Biden stated that households now have less debt and greater savings than they did when he started office in a speech to the largest federation of labor unions last month.
The president attempted to reframe the economic discussion in his address to the AFL-CIO convention in Philadelphia as his own support ratings have fallen and consumer prices, including the price of petrol, have risen.
However, Biden has come under fire for assertions that pouring money into the problem might possibly make it worse because doing so would further devalue the currency already in use.
Since I assumed office, households around the country are carrying less debt thanks to your assistance. Nationwide, they have greater savings,’ Biden added.
The Wall Street Journal reports that Jamie Dimon, the chief executive of JPMorgan, stated in June that American customers still had between six and nine months’ worth of purchasing power in their bank accounts.
According to Chris Wheat, co-president of the JPMorgan Chase Institute, as quoted by the Wall Street Journal, Americans’ bank account balances climbed after they received stimulus payouts and balances continue to be higher than they were in 2019.
The lowest income groups’ bank account balances were reportedly 65 percent higher at the end of March than they had been in 2019. However, they were formerly larger.
For example, in March 2021, some households’ balances were up 126 percent from the previous year.
The bottom 20 percent of earners were the only income bracket that didn’t use any of their retirement savings during the first quarter of the year, according to Moody’s Analytics.
These people are employed in the leisure, hospitality, retail, and healthcare industries, according to Zandi, who also noted that rising wages have enabled many of these individuals to keep saving money.
The Wall Street Journal was informed by Shannon Houston, 37, that the family’s principal expenses were covered by the stimulus checks and extended child tax credit payments.
In the second half of 2021, which concluded in December, families were given a child tax credit of up to $300 per child each month.
Houston stated, “It provided just enough buffer to make things simpler month to month.”
However, rising costs and increased spending are pushing the family to withdraw funds from their savings, including funds they had set aside even before the outbreak.
In order to avoid “totally squandering our resources,” the Connecticut mother is thinking about going back to work full-time.