U.S.Savings Rate Hits 2.6% — Lowest Since 2022 as Inflation Outpaces Wage Growth

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Households are curbing expenditures as living costs climb and earnings fail to keep pace with price pressures.

The personal savings rate — measured as the portion of post‑tax income left after expenses — dropped to 2.6% in April, according to the Bureau of Economic Analysis data published on Thursday. This marks a decline from 3.2% in March and 5.8% a year earlier.

“I initially thought the 2.6% figure was an error,” said Heather Long, chief economist at Navy Federal Credit Union, in an email. “Except for the spending surge of 2022, the personal savings rate has rarely been this low in the past 65 years.”

The April figure represents the lowest savings rate recorded since it fell to 2.2% in June 2022, a period characterized by record inflation and the dissipation of pandemic stimulus funds that had previously left many households with sizable cash balances and a strong desire to spend as the economy reopened.

The recent decline coincides with continued pressure on essential costs, including groceries, utilities, and particularly gasoline. The national average price rose to $4.43 per gallon as of Thursday, per AAA data.

“Even with tax reductions, wages are failing to keep up with inflation,” Long noted. “The issue extends beyond high fuel prices; rising electricity, healthcare, and food costs represent unavoidable expenses that households must meet, making it increasingly difficult to cut back.”

Inflation accelerated to 3.8% in April compared with the prior year, the highest rate since May 2023, according to the Bureau of Labor Statistics. Simultaneously, average hourly earnings grew 3.6% year‑over‑year, indicating that wage growth is beginning to lag behind price increases.

“Many consumers still have cash reserves for the moment, but they will likely need to tighten their budgets later this year as tax refunds are spent and no further income boosts are expected for most households,” Long added.

Faced with shrinking savings, a growing share of Americans are turning to credit to meet expenses. A recent NerdWallet survey found that 37% of adults — representing 35% of households earning $100,000 or more annually — plan to use credit cards, buy‑now‑pay‑later plans, or other loans to cover at least part of their spending this month.

The survey, conducted by the financial site in early May, included responses from 2,072 U.S. adults.

Fidelity’s data released on Thursday also indicates that more workers accessed their 401(k) balances during the first quarter. The proportion of participants with outstanding loans rose to 19.2% from 18.8% a year earlier, while the shares taking new loans or hardship withdrawals both increased.

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