(Photo courtesy canyon-news.com)
Consumers aren’t spending.
With many businesses closed or limiting operations, many Americans are saving more money than normal simply because…there are fewer opportunities to spend money. Overall, consumer spending fell 13.6% in April, and US savings rose to 33% in April, which is the highest level on record.
Let’s delve deeper into the statistics. While the 33% savings rate is quite high, it’s mostly due to the increase in saving among high-income Americans. In fact, lower-income Americans are still spending nearly as much as they did before April.
Regardless, the high savings rate does not bode well. Consumer spending makes up almost 70% of US GDP, so a high savings rate could be harmful to the economy in the long-run.
Remember – One person’s spending is another person’s income.