More Americans Withdrawing From Savings, Putting Away Less Money: Ipsos Poll

Twenty-dollar bills are counted in North Andover, Mass., in a photo dated June 15, 2018. Elise Amendola/AP Photo

The cost-of-living crisis has become entrenched in the U.S. economy, and an elevated Consumer Price Index (CPI) might linger longer than officials had anticipated. As a result, rampant inflation is altering the savings habits of Americans as they attempt to endure monthly price hikes at the supermarket or on their utility bills.

According to the September Ipsos-Forbes Advisor U.S. Consumer Confidence Tracker, nearly one-third (29 percent) are withdrawing from their savings account more than usual, up from 22 percent in August. The same poll also revealed that close to half (46 percent) report saving or investing less than usual, up from 38 percent a month ago.

This represented the third time in four months that the number of Americans drawing from their savings more than usual exceeded the number of those who do so less than usual.

In addition, 24 percent of respondents say they are spending money more than usual, up from 19 percent. At the same time, 27 percent note that they are paying off their credit cards and loans less than usual, up from 23 percent.

Meanwhile, the economic sentiment among Americans was unchanged this month, hovering at levels seen throughout the summer. But consumer confidence is still lower than it was at the beginning of 2022.

People shop at a grocery store in New York City, on May 31, 2022. Samira Bouaou/The Epoch Times

Survey authors note that sentiment is different based on demographics. So, for example, according to the poll, Democrats, high-income consumers, and Westerners scored significantly higher than Republicans, the unemployed, rural Americans, and individuals earning less than $50,000.

Consumers Struggling From Inflation

Respondents’ answers were generally consistent with the downward trend of personal savings rates. Bureau of Economic Analysis (BEA) data show that the household savings rate in the United States fell to 5 percent in July, unchanged from June. Since peaking at 33 percent in early 2020, the personal savings rate has steadily declined.

But many Americans might find it necessary to tap into their rainy-day funds or sock away less money for their retirement because inflation is eating into their salary and wages.

A recent Bankrate poll (pdf) released earlier this month showed that 55 percent of working Americans confirmed that pay is not keeping up with inflation. Although many workers are earning higher pay, they noted that this is not keeping pace with the overall cost of living.

“Inflation that has run at the highest levels in more than four decades has stripped buying power away from households of all walks of life,” said Greg McBride, the chief financial analyst for Bankrate, in a statement. “Even half of those receiving a pay raise, getting a promotion, or taking on new responsibilities said that higher pay falls short of the increase in household expenses.”

“The cost-of-living increase continues to be the exception rather than the rule,” he added.

A Bank of America survey found that 71 percent of workers assert that the cost of living is outpacing their earnings, up from 58 percent in February. The financial institution’s survey also found that 21 percent are using their emergency savings to pay their bills, 21 percent are clocking in extra hours at work, and even 6 percent are choosing to complete a 401(k)-hardship withdrawal.

Overall, 62 percent of employees are stressed about their finances.

The wave of developments that have transpired over the last 18 months has resulted in more U.S. households living paycheck to paycheck.

LendingClub published its 14th edition of the Reality Check: Paycheck-to-Paycheck research series on Tuesday. The report learned that 60 percent of consumers were living paycheck to paycheck in August, while about a fifth struggled to cover their bills.

But Anuj Nayar, LendingClub’s financial health officer, noticed an interesting trend forming in the U.S. marketplace. The research discovered that there is a considerable number of households that are living paycheck to paycheck but managing to keep up with their monthly obligations.

“More consumers living paycheck to paycheck indicates that many are continuing to lose their financial stability,” Nayar said in a statement. “Yet, the share of consumers living paycheck to paycheck with issues paying their bills has dropped seven percentage points in the past year. Many have moved to what now may constitute a stable lifestyle: living paycheck to paycheck, but still managing to pay your monthly bills. There is just nothing left over at the end.”

U.S. hourly wages have risen 5.2 percent year over year, now at $27.68. However, according to the Bureau of Labor Statistics (BLS), real average hourly earnings (inflation-adjusted), combined with a 0.6 percent drop in the average workweek, stand at a negative 3.4 percent.