The Blubber

Per Bloomberg

The rate of American personal savings is now dropping to its lowest rate in 17 years. The last time that the US experienced such low personal saving rates was in 2005.

The report highlights how inflation and rising borrowing costs affect how Americans save their money. In October 2022, the disposable income saving rate dropped to just 2.3% per the Commerce Department.

This comes as inflation-adjusted spending remains strong as consumers still spend massive amounts of their money on different expenditures. To add, even household debt is climbing to new heights amid the strong spending.

The household debt rate peaked after the 2008 financial crisis in the third quarter of 2022. According to Janet Yellen, Treasury Secretary, the US will reach its debt limit on Jan 19, reaching $31.4 trillion.

The US was not the only country that experienced rough financial turmoil in 2022, as $18 trillion worth of global stocks was wiped out. This included companies in the US, like Meta alone, losing $9.4 billion, as per Forbes.

Meta's loss totaled 0.05% of the global stock wipeout. BMO Capital Markets senior economist Sal Guatieri gave a statement regarding the situation.

Guatieri: “Households continue to mine a mountain of extra funds piled up during the pandemic... This extra piggy bank could last another year, also underpinning consumption.”

Another report by Yahoo Finance, citing St. Louis' Federal Reserve Bank data, shared how Americans' personal savings dropped significantly from $4.85 trillion in 2020 to $520 billion in November 2022. This is a drop of over $4 trillion in the span of just two years.

The article shared how "persistent inflation" was the reason behind savings depletion. This also comes at a time when multiple companies are reporting massive layoffs while living; some experts are warning of a potential recession.

Even Amazon founder Jeff Bezos gave a statement encouraging people to save despite Amazon's stock dropping during that period.

Bezos: “If you're an individual considering purchasing a big-screen TV, you might want to wait, hold onto your money, and see what transpires,”

See flow at unusualwhales.com/flow.

Other News:

• U.S. banks get ready for a recession
• Global stock wipeout at $18 trillion

Resources:

Bloomberg

Yahoo Finance