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Inflation zaps US savings rate, a warning sign for some
US in a recession right now: Former White House economist
Former Trump Council of Economic Advisers Chairman Kevin Hassett says if the next GDP report comes in negative, that means the U.S. is in a recession.
Americans are saving less, a potentially troublesome sign for the U.S. economy.
The personal savings rate, as a percentage of disposable income, fell to 4.4% in April, the lowest level since 2008 according to the Commerce Department. Total savings slipped to $815 billion. For some, the decline is a red flag for consumer spending, which accounts for 70% of gross domestic product (GDP).
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"We're starting to dip into savings because what generally happens in periods of inflation is you see demand destruction because prices just get too high and people just stop consuming whatever it is," said Mitch Roschelle, Macro Trends Advisors LLC founding partner. "While we haven't truly seen demand destruction yet, the first thing that happens is people start dipping into savings because they're not willing to slow down consumption."
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