: Americans’ personal savings have fallen off a cliff. Brace yourself for just how much they have declined.

by | Oct 26, 2022 | Stock Market

As red flags go, this is a big one. The personal savings of Americans have plunged this year, hitting $629 billion in the second quarter of 2022, according to the Federal Reserve Bank of St. Louis. That’s down from $1.98 trillion in the second quarter of 2021, and $4.85 trillion in the second quarter of 2020, boosted by COVID-related government cash. But it’s also down from $1.41 trillion in the second quarter of 2019, before the pandemic.

In fact, the personal saving rate — meaning personal saving as a percentage of disposable income, or the share of income left after paying taxes and spending money — fell to 3.5% in August, according to the Bureau of Economic Analysis. It’s quite a U-turn: The personal saving rate recently peaked at 26.3% in March 2021 and 33.8% in April 2020. But the drop in the personal saving rate isn’t all pandemic-related: In January 2020, before the coronavirus pandemic, it was 9.1%.

“The pandemic has left people in a vulnerable state.”

“I believe many people’s spending habits went into deep freeze, even when folks were stuck at home and the only person they might see on a daily basis was the Amazon delivery person,” Janet Lee Krochman, a certified public accountant in Costa Mesa, Calif., told MarketWatch. And now? “I think the gloves are off and folks are playing catch-up.” After the worst days of the pandemic, Americans splurged. “People want to experience life again, and create happy memories to help replace the not-so-nice ones that they have from the pandemic years,” Krochman said. Credit-card debt rose to $887 billion in the second quarter of 2022, according to the Federal Reserve Bank of New York. That’s up 13% on the year — the largest annual increase in 20 years. The pandemic has left people in a vulnerable state. On the one hand, stimulus checks led to a record decline in the number of American households without a bank account last year. The number of unbanked households fell to 5.9 million last year from 7.1 million in 2019. On the other hand, ​​Americans’ ability to pay bills on time fell for the first time i …

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