Saving Rate Hits the Lowest Level Since 2005

The US saving rate dropped to 2.4%, according to the most recent data release from the Bureau of Economic Analysis. It is the lowest level since September 2005 and a direct result of US consumer spending rising faster than income. It has been on the downward path since 2016 when rising consumption contributed to fueling economic growth.

Personal consumption expenditures rose 0.4% in December. Adjusted for inflation, it was up by 0.3%, after a 0.5% increase in November. This solid increase is largely driven by higher expenditures on goods and services at the end of the year.

Personal income climbed 0.35% in December. Disposable personal income, income remaining after deducting personal income taxes, edged up 0. 2% after accounting for inflation. This is the fourth consecutive increase since September 2017. Disposable personal income ended up with a 2.1 % annual increase in 2017, up from a 1.8% rise in 2016.



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