US Personal Savings Rate Drops

Chart of the Month
Written By Jonathan M. Elliott, CPWA®, CRPC®, CDFA®, ChSNC®, CPFA™, RMA®
Piggy Bank

Photo Credit: Brano, Unsplash

US Personal Saving Rate (% of Disposable Income)

US Personal Saving Rate

The U.S. personal savings rate jumped to an all-time high of 33.8% in April 2020. Stimulus checks, enhanced unemployment benefits, and declining consumer spending boosted personal savings during the pandemic. In addition, homeowners were able to lower their monthly mortgage payments by refinancing their home loans and locking in mortgage rates below 3% on a 30-year fixed loan. The increased personal savings sustained consumers during the pandemic and helped some individuals pay down debt.

Fast Forward to Today

January 2022’s personal savings rate of 6.1% was the lowest since December 2013. Why did the savings rate drop from an all-time high to a decade-low in less than two years? The savings catalysts from the pandemic are diminishing and sometimes reversing as daily life returns to normal. The last round of stimulus checks was released over a year ago. Enhanced unemployment benefits lapsed as the unemployment rate dropped to 3.6% during March 2022, and the labor market tightened. Consumer spending on services is rebounding as social distancing restrictions are relaxed.

Another significant factor pressuring the personal savings rate is rising inflation pressures. The Consumer Price Index, which measures inflation, soared 8.5% year-over-year in March 2022. It was the fastest annual pace since December 1981 and a significant change from the 2010s, when annual inflation was around 2%. Today’s high inflation is a timely reminder that life and the economy are unpredictable. Our team always stresses the importance of establishing a personal financial plan and sticking to it. The COVID pandemic taught us the importance of being ready for the unknown. Our goal is to help you be prepared for what comes next.

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Jonathan M. Elliott, CPWA®, CRPC®, CDFA®, ChSNC®, CPFA™, RMA®

I am currently the Managing Partner for our independent investment advisory firm, Optima Capital Management. Together with my business partners, Todd Bendell CFP® and Clinton Steinhoff, we founded Optima Capital in 2019 as a forward-thinking wealth management firm that serves as an investment fiduciary and family office for high-net-worth individuals and families. In addition to being the Chief Compliance Officer, my role at Optima Capital is portfolio management. I have over 18 years of experience in managing investment strategies and portfolios. I specialize in using fundamental and technical analysis to build custom portfolios that utilize individual equities, bonds, and exchange-traded funds (ETFs). I began my financial services career with Merrill Lynch in 2003. At Merrill, I served in the leadership roles of Market Sales Manager and Senior Resident Director for the Scottsdale West Valley Market in Arizona. On Wall Street Magazine recognized me as one of the Top 100 Branch Managers in 2017. I am originally from Saginaw, Michigan, and a marketing graduate from the W.P. Carey School of Business at Arizona State University. I am a Certified Private Wealth Advisor® professional. The CPWA® certification program is an advanced credential created specifically for wealth managers who work with high net worth clients, focusing on the life cycle of wealth: accumulation, preservation, and distribution. In addition, I hold the following designations - Chartered Retirement Planning Counselor (CRPC®), Certified Divorce Financial Analyst (CDFA®), Certified Plan Fiduciary Advisor (CPFA), and Retirement Management Advisor (RMA®). In the community, I am a member of the Central Arizona Estate Planning Council (CAEPC) and serve as an alumni advisor and mentor to student organizations at Arizona State University. My interests include traveling, outdoors, fitness, leadership, entrepreneurship, minimalism, and computer science.

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