Are Americans’ Pandemic Savings Gone?

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The pandemic, with its lockdown, had several adverse effects on Americans. But there was one saving grace: accumulated savings. People couldn’t spend their money, so they saved it.

But since the lockdown has been lifted, what’s happening with all that savings? Are Americans still saving, or is it all gone?

Pandemic Excess Savings

The federal government’s answer to the lockdown was releasing several stimulus packages. The result was that between 2020 and 2021, $5 trillion was injected into the economy.

There was direct assistance through checks, unemployment insurance benefits, and increased child tax credits. However, there was also indirect assistance through the Paycheck Protection Program. This included several local and national moratoria on jobs and housing.

Expenses went down while more money came into the home. With nothing but the basics to spend these checks on, many people simply deposited the money in their savings.

The result was an estimated accumulative savings of $2.1 trillion at its peak in August 2021.

Pandemic Savings Depleted

Spending the pandemic savings was gradual at first, but may have accelerated due to economic times.

From September to December 2021, the drawdown averaged $34 billion monthly. However, in 2022, inflationary prices increased the drawdown to $100 billion monthly. As of the fourth quarter of 2023, it had slowed to $85 billion monthly.

And although not totally gone, in 2023, the aggregate personal savings was down to $500 billion.

Many People Without Emergency Savings

Many Americans have some savings, but this is usually in the form of 401(k) plans. What’s in the bank for emergencies is a different story.

In 2022, 24 percent of Americans didn’t have any money saved for emergencies. While 37 percent had at least one month’s worth of savings, 39 percent reported having less.

Savings May Be Increasing

But the tide may be turning because of unknowns about the economy; many people are forgoing luxuries and putting their extra money into savings accounts. More than half (52 percent) met or exceeded their savings goals.

Overall, Americans managed to save an average of $6,138. Millennials saved the most, at $9,299, while baby boomers saved the least, at $4,060. Other demographics’ savings were divided between Generation Z, with $6,441, and Generation X, with $5,132.

Millennials may have saved the most because of the moratorium on student loan payments. Also, one in three 18- to 34-year-olds live with their parents and are able to save money.

Gen X and baby boomers may have difficulty saving because many still pay college tuition and miscellaneous bills for their adult children and grandchildren.

Economy Effecting Savings

The economy has thwarted consumers’ attempts to save. In fact, many have spent their savings to keep pace with rising prices.

For the last four years, the Consumer Price Index (CPI) has been a rollercoaster ride for Americans, with the CPI spiking in 2022. The following is a snapshot of the last four year of the CPI:

• 2020—rose 1.4 percent
• 2021—rose 4.7 percent
• 2022—rose 8.0 percent
• 2023—rose 3.4 percent

Although the CPI appears lower, it has built on the previous CPIs. Prices haven’t decreased. They are remaining as high and are actually continuing to grow.

Consumers’ savings are going into grocery carts and gas tanks. As higher food costs and fuel costs take their bite out of income. Without excess income there’s little hope of contributing to savings.

Is Credit Card Use Hurting Savings?

Credit card debt is thwarting the need to save for some. Overall, Americans owe more than $1 trillion in credit card debt. Generation X carries the most debt, with the average balance in 2023 coming in at $9,123.

But, overall, the average credit card balance is around $6,501.

This is how it breaks down by generations:

• Generation Z—$3,262
• Millennials—$6,521
• Generation X—$9,123
• Baby boomers—$6,642

In 2021, Generation X had a balance of $7,070, and millennials had a balance of $4,576. However, the other generations saw an increase as well.

Consumers are using credit cards to pay for basic living expenses. The high credit card interest rates do more to diminish Americans’ income and, consequently, savings.

Perceptions of Generation’s Savings

But how do these generations feel about their savings? And are they aware of the need for savings?

Those age brackets that are uncomfortable with their savings include:

• Gen Z—63 percent uncomfortable
• Millennials—60 percent uncomfortable
• Gen X—66 percent uncomfortable
• Baby boomers—51 percent uncomfortable

Overall, in the generations, 59 percent were uncomfortable with their savings, but there was a desire to save more.

Pandemic Savings Almost Gone

Excess savings in the United States have quickly accumulated and slowed down. It is reasonable to estimate that the overall level of the pandemic savings has been spent.

Higher spending and credit card debt due to the economy may be contributors to this spending. But consumers are concerned, and the trend after the lessons of the economy is to save.

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