The personal savings rate, as a percentage of disposable income, fell to 4.4 per cent in April, the lowest level since 2008 in the US, according to the Commerce Department.
“For some, the decline is a red flag for consumer spending, which accounts for 70 per cent of gross domestic product,” said Fox Business in its report about the decrease.
With consumer inflation at a 40-year-high, costs are rising for everything from fuel to food, chipping away at personal balance sheets, said the report.
While consumers are still spending, dollars are not going as far, Xinhua news agency reported.
Walmart and Target both reported a slowdown in sales and profits during their recent quarterly earnings reports because of inflation.
“The consumer is really pessimistic,” Kevin Hassett, Former Chairman of the Council of Economic Advisors for the Donald Trump administration, was quoted as saying.
“People are as pessimistic about consumption as they’ve been going all the way back financial crisis and one way you can see that is the savings rate has dipped to below 5 per cent which is the lowest it’s been since the September of the Lehman (Brothers) crash,” Hassett said.