A Decade in Perspective
The past ten years have been a financial rollercoaster for American households. From the aftermath of the Great Recession to the extraordinary disruptions of the COVID-19 pandemic, savings behavior has reflected both resilience and vulnerability. As we approach 2026, the question looms: should Americans save more or lean into spending to fuel growth? The answer lies in understanding the data and the broader economic context.
A Decade of Shifts in Savings
- 2015–2019: Modest Stability During the mid-2010s, the U.S. personal savings rate hovered between 6–8% of disposable income, reflecting steady employment and consumer confidence. Credit was accessible, and households balanced spending with moderate saving.
- 2020: Pandemic Surge In April 2020, the savings rate skyrocketed to 31.8%, the highest on record. Lockdowns curtailed spending, while stimulus checks and unemployment benefits boosted disposable income. Households accumulated nearly $2.7 trillion in personal savings that year.
- 2021–2022: Gradual Decline As restrictions eased, pent-up demand drove spending. Savings fell back toward 6–7%, still above pre-pandemic averages but declining steadily. Inflation began to erode purchasing power, pushing households to dip into reserves.
- 2023–2025: Return to Low Levels By mid-2025, the savings rate had dropped to 4.6%, close to historical lows. Disposable personal income stood at $23 trillion, but consumer spending reached $16.4 trillion, leaving little room for saving.
Why the Decline Matters
- Debt Pressures: Credit card balances and auto loans have surged, with average household debt climbing. Low savings leave families vulnerable to interest rate hikes.
- Inflation Impact: Even as inflation cooled from pandemic peaks, essentials like housing and healthcare remain costly, squeezing budgets.
- Economic Uncertainty: Geopolitical tensions, climate-related disruptions, and cyclical recessions mean households need stronger buffers.
Looking Toward 2026
Econometric models project the U.S. savings rate will hover around 3.9–4.0% in 2026, one of the lowest sustained levels in decades. This suggests households may continue prioritizing consumption over saving, potentially fueling short-term growth but risking long-term stability.
Should Americans Save More or Less?
- Arguments for Saving More
- Resilience Against Shocks: A higher savings rate cushions against job loss, medical emergencies, or recessions.
- Retirement Security: With Social Security under strain, personal savings are critical for future retirees.
- Debt Reduction: Redirecting income to savings helps reduce reliance on high-interest credit.
- Arguments for Saving Less
- Economic Growth: Consumer spending drives nearly 70% of U.S. GDP. Lower savings can stimulate demand.
- Confidence Indicator: Willingness to spend reflects optimism about future income and stability.
The Takeaway
While spending supports growth, the current low savings rate is unsustainable. Americans should increase savings modestly in 2026, aiming for at least 6–8% of disposable income, closer to pre-pandemic norms. This balance allows households to enjoy consumption while building resilience. Policymakers can support this by incentivizing savings through tax-advantaged accounts and addressing structural costs like healthcare and housing.
The past decade shows how quickly savings behavior can swing—from pandemic highs to post-pandemic lows. As 2026 approaches, the challenge is not to retreat into austerity but to restore balance. By nudging savings upward, households can secure their futures without stalling economic momentum. In a world of uncertainty, resilience is the best investment.