The Unsustainable American Spending Spree: Are Savings at Risk?
Economists are expressing concerns about the sustainability of America's current spending spree, as the personal savings rate continues to decline. The share of disposable income that households save dropped to 3.4% in September, down from 4% in August. While consumer spending rose in September, economists argue that the underlying drivers of spending are not reliable or sustainable, particularly as real income growth declines. The dip in savings is seen as unsustainable, and experts predict that consumers' spending enthusiasm will diminish heading into 2024. Rising inflation and interest rates are also impacting consumers, with cracks appearing on household balance sheets. Despite increased wealth, some of it is locked in assets that cannot be easily sold, limiting liquidity and spending.
