Stats from the Federal Reserve show Americans reached a peak of $2.3 trillion in savings between 2020 and 2021.
Today, that number is down to $533 billion, according to new numbers from the U.S. Department of Commerce and Wells Fargo, reported by MacroEdge chief economist Don Johnson.
In addition, stats from the Federal Reserve Economic Data (FRED) system show the amount of personal savings as a percentage of disposable personal income dropped to 4.6% in May of this year.
That’s well below the historical average of 8.9%.
The news coincides with a sharp rise in the use of credit cards among US citizens.
American consumers collectively owe a record $986 billion on their charge cards, according to data released by the Federal Reserve Bank of New York last month.
Wells Fargo economist Shannon Seery tells Newsweek the data shows Americans are becoming more vulnerable to future economic shockwaves.
“Households have been able to continue to spend at elevated rates and that sustained level of demand is helping stave off a US recession.
[But] acquiring less in savings will ultimately leave US households more vulnerable to economic shock and could potentially position them worse off during an eventual economic contraction.”
Wells Fargo economists expect the labor market will soften in the months ahead, leading to reduced spending that will trigger a mild recession at the start of next year.