Inflation is decimating the economy and is especially harmful to the poor, the middle class, and small businesses.  The savings rate has dropped to the lowest level since 2008.

But don't worry, say economists: Americans have a huge cushion from previous high savings rates.  They say the savings rate during lockdowns was 33.8%, coming significantly from government kickbacks, so they have extra money around to keep up their spending. 

The economists who write this stuff must be the same ones Biden cites who said Build Back Better would lower inflation. 

Anyone who believes that the savings rates for average Americans ever hit 33% needs to have his head examined. 

According to TheBlaze, in an article titled "US savings rate hits lowest levels since 2008, and economists say Americans have 'excess savings' that will provide a buffer."

This past April, the U.S. personal savings rate fell to 4.4%. According to data from the U.S. Commerce Department, this is the lowest this metric has been since September 2008, Yahoo Finance reported.

"In a typical cycle, a sharp drop in the savings rate would be a warning sign about the sustainability of spending," Wells Fargo economists, led by Tim Quinlan, wrote in a public note this past week.

The note continued, "Because balance sheets are in such better shape, we see less cause for concern for today. In fact, it is actually our baseline forecast for the saving rate to fall below its prior-cycle average of 7.2% through the end of 2023."

In April 2020, the savings rate hit a record 33.8% as stimulus checks from the government provided consumers with much needed relief as the nationwide response to COVID-19 kept many people at home and forced businesses to close.

Economists believe that there are trillions of dollars in unused savings that Americans can use to keep themselves afloat despite a rapidly increasing number of Americans not being able to contribute to their savings and grow their nest eggs.

Ian Shepherdson at Pantheon Macroeconomics said that Americans becoming unable to save their earnings is "no big deal."

The macroeconomist said, "The stock of excess savings is still $2.2 [trillion], and the rundown over the past three months has averaged only $41 [billion] per month."

The economists must have missed the information from January 2022 that said 56% of Americans don't have $1,000 to pay for an emergency.  They do not have excess savings.  Their savings rate is not, nor has been, 4%, 7% , or 33%.  Their savings rate is near or below zero.  They are living paycheck to paycheck and on borrowing. 

According to CNBC:

Some 56% of Americans are unable to cover an unexpected $1,000 bill with savings, according to a telephone survey of more than 1,000 adults conducted in early January by Bankrate.

"Emergency savings and the $1,000 threshold are really an indication of how much people are struggling, that they are that close to the edge financially," said Greg McBride, senior vice president and chief financial analyst at Bankrate. 

Instead of drawing on their emergency savings funds, many Americans would have to go into debt to foot an unexpected $1,000 bill, either by asking family and friends for a loan, taking a personal loan from a bank or charging a credit card.

Paychecks are supposedly rising 5% while inflation is going up 8%.

Remember that the paychecks are not going up for everyone and that the 5% is a pre-tax number.  Using a conservative 30% tax rate, with federal more than 15%, FICA 7.65%, and state taxes, the net pay would be going up less than 4%, which is less than half the supposed inflation rate. 

Gasoline has gone up over 50% in the last year, and gasoline, and other energy costs, eat up a much higher share of disposable income of the poor and middle class than other essentials or wants.  Therefore, the tangible inflation rate for the majority of Americans is much higher than the 8% supposed rate for a basket of goods.

The media and other Democrats should stop pretending that Biden and his policies aren't the cause of this disaster.  His stated goal is to destroy the fossil fuel industry, and this is what you get with such abject stupidity.

We were told that with Biden, we would finally get adults back in the White House, but what we got was a Cabinet with the combined I.Q. of a five-year-old. 

High inflation will lead to economic collapse.  The Democrats will get their wish of a narrowing wealth gap if stock, real estate, and other asset prices collapse.  The poor, middle class, and small businesses will also be destroyed but the wealth gap will be narrowed so maybe the media and other Democrats will feel better.  Of course, the politicians and bureaucrats will be more powerful and that is the Democrats goal. 

Jerome Powell, Janet Yellen, Biden, and others said the high prices were because of low unemployment and great economic policies and that the prices were transitional.  They were wrong in all respects.  During Trump's term, we had excellent economic growth, record low unemployment, rapidly rising wages, energy independence, and low inflation.

The moral of the story is, don't trust supposed experts and people who describe themselves as adults in the room.  They just make a lot of stuff up. 

Image: Pixabay, Pixabay License.