Shifts in U.S. Personal Savings: The Impact of Pandemic Fiscal Support

The fiscal support provided during the pandemic resulted in a significant increase in disposable income throughout the U.S. economy. This increase occurred despite health-related economic closures and social distancing measures, significantly reducing household spending. As a result of this fiscal policy, total personal savings increased rapidly, exceeding pre-pandemic trends and exceeding levels seen in previous recessions.

Yet, personal savings fell below pre-pandemic levels after August 2021. This suggests a reduction in pandemic-related excess savings.

In December 2023, the personal savings rate in the United States reached a record low of 3.7%, the lowest level since December 2022. It's important to note that the personal saving rate is the ratio of personal saving to disposable income.

Consumers are saving less relative to their disposable income than they were before the pandemic, and this trend is likely to continue until the economy has fully recovered from the pandemic. Savings rates have fallen steadily since last spring.

Sources: BEA; St. Louis Fed