The state of US consumers: less savings, more debt and trouble paying those debts
In September, consumers saved just 3.1% of their disposable income. That’s down from the 8.8% average in 2019 (pre-COVID).
One estimate: US consumers have 9-12 months before they burn through any savings built up during the pandemic (WSJ).
Consumers are taking on more debt than ever. Credit card balances increased 15% in the third quarter — the highest jump in 20 years.
But they’re also struggling to pay down their debt.
- Missed payments (90 days past due) increased to 3.7% in the third quarter — up from 3.2% the year before.
- Missed payments (among 18 to 29-year-olds) rose to 6% — but were still below the 9% pre-pandemic average.
Retail spending has held strong for now — but next year could look much different. So far, layoffs have largely been concentrated in the tech sector.
The US unemployment rate is forecasted to reach 4.4% in 2023 — up from 3.7% . That would mean ~1.5M more Americans losing their jobs.