Personal savings rate

In 2025, the personal savings rate in the United States is forecast to increase, rising 0.7 percentage points to reach an estimated 5.2%. This turnaround comes as interest rates begin to fall for the first time following several years of sizable hikes. Lower borrowing costs provide consumers with modest relief from prior budgetary pressures, encouraging an uptick in savings activity. Nevertheless, the personal savings rate remains well below its cyclical peak seen in 2020, constrained by elevated living costs and recent inflationary pressures.

Between 2020 and 2025, the personal savings rate exhibited considerable volatility, reflecting the extraordinary conditions caused by the COVID-19 pandemic and subsequent macroeconomic developments. In 2020 and 2021, a combination of government stimulus payments and restrictions on in-person activities drove a surge in personal savings, as the average consumer had more disposable income and fewer options for spending it. As a result, the personal savings rate averaged 15.1% in 2020, the highest in modern record, and remained relatively high at 10.9% in 2021. As the economy fully reopened in 2022 and pandemic support from the federal government receded, the personal savings rate deteriorated sharply, declining to 3.0% due to rapidly increasing inflation that significantly increased the cost of living. Tight monetary policy by the Federal Reserve, which began aggressive interest rate hikes to combat inflation in 2022 and 2023, further weighed on household budgets by increasing borrowing costs, though this did little to support savings as inflation eroded real incomes. The savings rate hovered below 5.0% in 2023 and slid further in 2024, while high prices for essential goods and services constrained household ability to save. The primary macroeconomic drivers during this period include shifting monetary policy, household responses to inflation, and evolving consumer confidence influenced by labor market strength.

A secondary trend over this period has been changes in household access to credit and consumer psychology. Greater access to credit, including historically low rates in the prior decade, led to a decline in the urgency for households to maintain high savings, though this effect was partially reversed during the brief credit tightening that occurred in the pandemic aftermath. Additionally, persistently high inflation from 2022 to 2024 reduced the capacity and incentive for precautionary savings, despite rising wages, as real disposable incomes failed to keep pace with costs. These factors, combined with the unwinding of government pandemic-related fiscal policies, resulted in overall savings rates stabilizing at levels notably lower than those during the pandemic-induced spike.

Over the entirety of 2020 to 2025, the moderation from pandemic-era highs and the downward adjustment during the post-pandemic economic normalization have resulted in a personal savings rate that is now closer to its pre-pandemic trajectory. Macroeconomic headwinds such as declining government stimulus, elevated inflation, and periods of high interest rates have constrained growth in the savings rate, which remains below historical norms as consumers prioritize immediate consumption and contend with rising expenses.