ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / NEWS

Americans Are Spending More and Saving Less; Is Recession Inevitable?

The United States economy gets a 70% boost from people purchasing and spending money.
PUBLISHED MAR 4, 2024
Cover Image Source: Americans are spending more than their savings | Unsplash | Photo by D koi
Cover Image Source: Americans are spending more than their savings | Unsplash | Photo by D koi

With the prices spiraling of almost everything in the United States, it is shocking to see that people are saving less and spending more on frugal items. Economists and financial experts are noticing the trends where Americans are saving less percentage of their paychecks as compared to their spending with each passing day. This has been quite helpful for the US economy but the predictions are if this trend continues, the economy might slip into a recession. Experts say that the strategy of spending more and saving less will not work in future times as people will be more inclined towards savings. These fluctuations might make the economy feeble. Let's have a look at the American's spending percentages over the years. 

Americans are not focusing on saving instead they are more inclined towards spending. Image Source: Pexels|Photo by Mathieu Stern
Americans are more inclined toward spending | Pexels | Photo by Mathieu Stern

The United States economy gets a 70% boost from people purchasing and spending money. Is the COVID-19 pandemic the reason for higher spending? People were saving 7% before the pandemic which declined to 5.3% in last May, as per the data from the Commerce Department.

Gus Faucher, a chief economist at the PNC Financial Services Group says that on average people personally save around 6.2% of their income. He further reminded us that people are spending more money now but this trend will come down in the coming years.

When the pandemic hit the whole world, everyone rushed to save money for necessities as it was a fight for living. During that phase, people's savings went up to 32% but by June 2022, the rate dropped to 2.7% as they stopped saving money. In 2021, people saved $2 trillion but by September 2022, just $430 billion was left, which means their savings were exhausted and they were spending amounts from their paychecks. Gregory Daco, chief economist of EY-Parthenon comments on the spending trend and says, "If you’re stretching your budget for the holidays, that’s one thing. If you have to do that to pay for your utilities, that’s a very different thing.”



 

One other possible reason for not spending much this year is attributed to the retirement of a larger American population. When people retire, unless they are government employees, they tend to spend less on unnecessary items as they have to plan their survival. An Indianapolis citizen Cynthia Woltjer who is 85 years old, shares that she and her husband have reduced their spending since the time they retired. She further mentions that going out for dinner and paying hefty prices for things that are no longer needed have been reduced. When she was in service and earning a good amount, the couple did not worry much about their expenses but now as the prices are touching the skies, they have to regulate their budgets as they cannot just rely on pensions, said Woltjer.



 

Amidst all the news of recession, Americans are not all worried and are feeling more confident about their economy. They have a common notion that the country will not fall and easily dodge the recession phase even though the Federal Reserve has upsurged its interest rates just to control inflation. In the opinion of economists like Faucher and Daco, Americans pulling back their spending won't provoke a recession. People can easily save money if they are earning well at their jobs and they don't need to live in fear of recession as the possibilities have gone down from 61% to 36%. But still, the risk prevails. Economists predict that yearly jobs will decline slowly from 250,000 in 2023 to just under 100,000 this year. The growth of increased wages will be slow and might touch 3.5%, which is less than the previous growth of 4.5% the market witnessed.

MORE ON MARKET REALIST
Harvey was very invested in the game and reacted to every answer with enthusiasm.
25 minutes ago
The creator's simple hack can make sure that people avoid splurging too much on groceries.
17 hours ago
The contestant's answer wasn't the only one that made the host crack up.
19 hours ago
The company received multiple complaints from customers finding wiry pieces of metal in the product.
1 day ago
The soon to be birthday girl, Ja-Juana fell into temptation and lost the big prize.
2 days ago
The player, Gary got too excited and almost tore down the prize board off the roof.
2 days ago
The player, Megan Zandrowicz, walked away with a fantastic $65,000 from the show.
2 days ago
In the end, the guest regretted using the beautiful Mettlach Cameo Platter for her parties.
3 days ago
The contestant Mary, won a trip to Vancouver as a perfect birthday present.
4 days ago
The player was in for another heartbreak after she failed to solve the puzzle.
5 days ago
The player, Elisa Butcher's risky dice roll stunned everyone as she won a brand new Volkswagen car.
5 days ago
The star of Boyz II Men got sentimental after looking at the item from their first album cover.
5 days ago
It wasn't an ordinary ring but the 2004 Patriots Super Bowl Ring, which Harrison refused to let go.
6 days ago
Harvey was in disbelief after he misheard what Ming-Na Wen's teammate said.
6 days ago
Harvey could feel the pain as he collected the answers from the contestants.
7 days ago
The owner of Harry Karstens' First Ascent Denali Ice Axe was shocked to learn how valuable it was.
7 days ago
As model Rachel Reynolds slammed on the brakes, fellow presenter Alexis Gaube nearly fell over.
7 days ago
Harvey couldn't believe his eyes when an answer did not show up on the board.
Oct 21, 2025