Mohacsy's Safe Portfolio Member Forum

[santafe2]

Helps explain why the market is so happy but the economy in the US is driven by the consumer. When will the consumer begin to feel pain? We'll know if we dodged a bullet by next spring. American's personal savings rate averaged about 8% from 2015 through 2019. That jumped to almost 34% in April of 2020 during the government's initial giveaway programs. Over the next year the savings rate averaged 17.5% as Americans avoided almost everything recreational. Then in September of 2021 Americans began spending all that money they had been saving. By June last year, the savings rate had fallen to 2.7%. And while it's recovered somewhat since then it's still at a rather anemic 4.5%.

Uncle Joe is helping 2% of people with educational debt but the other 98% will begin making payments in September-October. Will that make consumers less likely to spend money and will consumers continue moving up to the more normal 8% savings rate? If so, spending will begin to fall. We'll see. As the article noted, it's uncharted territory.

Here's a link to the FRED chart.
https://fred.stlouisfed.org/series/PSAVERT