CINCINNATI — New federal data shows consumers are spending more but saving less.
Consumer spending and personal income both increased, according to the latest report from the U.S. Bureau of Economic Analysis. However, growth in spending outpaced income growth.
“So where will the spending increase come from?” said Dr. Michael Jones, assistant professor of economics at the University of Cincinnati. “That will have to come from savings.”
The personal savings rate (or percentage of disposable personal income) is at its lowest since fall 2022. Historical data can be tracked here.
“Inflation remains a problem for the economy,” Jones said. “Consumers are still having trouble making some of their payments.”
Jones advises consumers to save at least 10% of the money they take home.
“Part of the reason is that we can't predict what the economy will do in terms of employment,” he said.
“It's tough considering we have four babies,” said Kaitlin Hahn, a Cincinnati resident.
Despite this, Hahn tries to save half of her income. She drives for DoorDash. Her salary usually goes toward food, diapers, and bills.
“My daughter's birthday just passed, and little things like that make time a little difficult,” she said.
Jones said the federal government is in a difficult situation.
“The Fed needs to keep interest rates high to control inflation,” Jones said. “But clearly, with interest rates remaining high, it makes things even more difficult for consumers and businesses.”
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