Inflation hits Americans’ COVID cash stash as personal savings rates slump to just 5.4%

President Biden’s claim that Americans are saving more since he took office has been exposed as a lie by data showing how inflation has eaten into rainy-day funds.

New statistics from Federal Reserve Economic Data (FRED) showed that in May this year, the average American had just 5.4 percent of their pay check left to save after covering their living expenses.

That amount is known as the National Personal Savings rate.

It currently sits far below the all-time record of 33.8 percent that was recorded in April 2020. It also sits below the average amount Americans had available to save each month over the last decade.

The lowest National Personal Savings rate over the last decade – prior to the May figure – was recorded in January 2013, when it hit 5.6 percent.

By the end of 2021, Americans had accumulated a total of $ 2.7 trillion in savings. They have since burned through about $ 114 billion of that vast savings pile, meaning that just over $ 2.5 trillion in savings remains.

The findings come despite Joe Biden declaring in May that: ‘Since I took office, families have increased their savings and have less debt.’

Biden’s claim about debt is also shaky, given the historic amount Americans now owe on credit cards.

Overall credit card debt rose 20% during the month of April to $ 1.103 trillion. The previous pre-pandemic record was $ 1.1 trillion.

Americans ’savings accounts have also shrunk by more than $ 9,000 over the past year – from $ 73,100 in 2021 to $ 62,086 in 2022 – according to a survey from wealth management company Northwestern Mutual.

During the first year-and-a-half of the COVID pandemic, millions of Americans were handed generous unemployment benefits, often higher than the salaries they were earning, as well as thousands in stimulus checks.

Rent and student loan holidays enforced to stop people from being made homeless further bolstered finances – as did the fact that so many entertainment and travel options were shuttered, meaning there was less to fritter cash on.

The latest figures from the St. Louis Fed showed that in May this year, the average American had just 5.4 percent of their pay check left to save after covering their living expenses

The latest figures from the St. Louis Fed showed that in May this year, the average American had just 5.4 percent of their pay check left to save after covering their living expenses

This chart shows the National Personal Savings rate for each month over the last decade.  Prior to May, the lowest figure recorded was in January 2013, when Americans had 5.6 percent of a leftover paycheck to save

This chart shows the National Personal Savings rate for each month over the last decade. Prior to May, the lowest figure recorded was in January 2013, when Americans had 5.6 percent of a leftover paycheck to save

By the end of 2021, Americans had accumulated a total of $ 2.7 trillion in savings - and have since burned through about $ 114 billion of that vast savings pile, meaning that just over $ 2.5 trillion in savings remains

By the end of 2021, Americans had accumulated a total of $ 2.7 trillion in savings – and have since burned through about $ 114 billion of that vast savings pile, meaning that just over $ 2.5 trillion in savings remains

Last month, President Joe Biden told the largest federation of labor unions that he’s working to rebuild the U.S. economy around workers and claimed that families have less debt and more savings than when he took office.

Last month, President Joe Biden told the largest federation of labor unions that he’s working to rebuild the U.S. economy around workers and claimed that families have less debt and more savings than when he took office.

Analysis by Moody’s, first reported in the Wall Street Journal, found that the rise in cost in living was part of the reason for the savings slump

Many Americans are having to dip into pandemic savings to cover increased food, gas and energy bills. Leisure activities such as vacations and eating out have also rocketed in price.

Economists say the huge savings pile is helping cushion many Americans from the worst effects of inflation.

It rose by almost 8.6 per in the year ending May, as gas prices also reached all-time highs.

Data from the Federal Reserve shows that household debt has increased by over $ 1.5trillion since Biden took office in January 2021.

TIMES SQUARE IN 2020: Thousands of people pass through Times Square every day spending money at shops and restaurants, but when the pandemic hit, it became empty and with nothing to spend money on, Americans accumulated a total of $ 2.7 trillion in savings

TIMES SQUARE IN 2020: Thousands of people pass through Times Square every day spending money at shops and restaurants, but when the pandemic hit, it became empty and with nothing to spend money on, Americans accumulated a total of $ 2.7 trillion in savings

Last month, President Joe Biden told the largest federation of labor unions that he’s working to rebuild the U.S. economy around workers and claimed that families have less debt and more savings than when he took office.

The speech before the AFL-CIO convention in Philadelphia was the president’s attempt to reset the terms of the debate on the economy as his own approval ratings have slid while consumer prices – and the cost of gasoline – have surged.

But Biden has faced criticism over claims that pumping money into the issue could actually make it worse, as an increase in money supply will further diminish the value of dollars already in circulation.

‘Since I took office, with your help, families are carrying less debt nationwide. They have more savings nationwide, ‘Biden said.

Inflation is at a more than 40-year high and is eating into Americans' ability to save, with the amount left over to save for a rainy day now far lower than during the COVID pandemic

Inflation is at a more than 40-year high and is eating into Americans’ ability to save, with the amount left over to save for a rainy day now far lower than during the COVID pandemic

Prices of everything from gas to travel to hotels have gone up since January 2021

Prices of everything from gas to travel to hotels have gone up since January 2021

According to the Wall Street Journal, JPMorgan Chief Executive Jamie Dimon said in June that US consumers still had between six and nine months of spending power remaining in their bank accounts.

Americans’ bank account balances increased after they received stimulus payments and balances remain above where they were in 2019, according to Chris Wheat, co-president of the JPMorgan Chase Institute, as reported by the Wall Street Journal.

It was reported that at the end of March, bank account balances with the lowest incomes were 65 percent above 2019 levels. But, they used to be higher – like in March 2021, when balances for some households were up 126 percent from 2019.

The only income group that didn’t draw on their pandemic savings in the first quarter of the year was the bottom 20 percent of earners, Moody’s Analytics reported.

‘These are folks working in leisure, hospitality, retail, healthcare,’ Zandi said, adding that wage growth has allowed many of these workers to continue to save.

Former President Trump (pictured here at a rally in June 2022) issued the first $ 1,200 checks for Americans to cushion the economic blow from the coronavirus crisis back in 2020

Former President Trump (pictured here at a rally in June 2022) issued the first $ 1,200 checks for Americans to cushion the economic blow from the coronavirus crisis back in 2020

Shannon Houston, 37, told the Wall Street Journal that it was the stimulus checks and expanded child-tax-credit payments that helped their family with major expenses.

Families received a child tax credit of up to $ 300 per child each month in the second half of 2021, which ended in December.

‘It was just enough buffer to make things easier month to month,’ Houston said.

But now higher prices and increased spending is forcing the family to dip into their savings – which includes money they saved even before the pandemic.

The Connecticut mother is considering returning to work full-time so they don’t ‘completely squander our savings,’ she said.

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