By Arabinda Basistha
The rate at which Americans are saving money has dipped close to an all-time low, according to the Bureau of Economic Analysis. The personal savings rate was 2.3% as of October, down from 7.3% a year earlier. It’s the lowest since July 2005, when the rate hit a record low of 2.1%.
We asked Arabinda Basistha, an economist at West Virginia University, to explain the personal savings rate, what’s driving it so low and what it means as a potential recession looms in 2023.
What is the personal savings rate?
The personal savings rate measures how much of Americans’ after-tax, or disposable, income is left over after spending on bills, food, debt and everything else. Calculated and reported by the U.S. Bureau of Economic Analysis, it is an important component of the financial security of American families.
The latest data shows Americans are saving just 2.3%, or US$2.30 of…