Savings boomed through the early days of the pandemic as unprecedented stimulus and weak in-person spending left Americans more cash to stash away.
Surging inflation led many to tap their savings to afford everyday staples, and as prices continue to soar, the cash buffer has continued to shrink.
According to the newly revised stats that came out on September 30, the savings buffer peaked at only $2.1 trillion in August 2021, and roughly $630 billion — or 31% — of that cushion has been spent.
Should households start to cut spending and prop up their declining savings, it could remove a much-needed driver of economic growth.Despite the early discounts, Americans' dwindling savings will likely lead to a smaller holiday spending boom.