5 economic signals suggest U.S. consumers are feeling the strain
Summary
U.S. consumers are showing signs of financial strain as inflation remains high and incomes fail to keep up with rising prices. Key indicators such as falling savings rates, increasing credit card delinquencies, and more loans from retirement accounts suggest many households are feeling the pressure.Key Facts
- Consumer spending makes up about 70% of U.S. economic activity.
- Inflation is currently the highest in nearly three years, impacting basic costs like gas and food.
- Household income, after adjusting for inflation, has dropped by more than 1% over the past year.
- Credit card delinquencies are at their highest level since 2011, with about 13% of accounts overdue in early 2024.
- The personal savings rate fell to 2.6% in April, the lowest in 22 years.
- More Americans are taking loans and hardship withdrawals from their 401(k) retirement accounts.
- Lower- and middle-income households have reduced gas purchases while high-income households have not changed their driving habits.
- The U.S. GDP grew at a modest rate of 1.6% in the first quarter of 2024, showing slow economic growth.
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