NCPA - National Center for Policy Analysis

U.S. Household Debt Is High While Savings are Low

April 16, 2015

In late March, Deutsche Bank's chief international economist, Torsten Sløk released a report showing that 47 percent of American households had a zero or negative savings rate in 2013, down one percentage point from its peak in 2010. Given that the recession supposedly ended in 2009 and that it has been green shoots since, this is depressing news.

In the aftermath of the Financial Crisis, it is hard to believe that those who have money to save would choose not to save it. Instead, savings accounts of all types are low while most American households carry debt.

Consider these two facts:

  • The average balance in a 401(k) account at low cost investment provider Vanguard was $101,650 — or about $4,000 a year if used to fund a retirement with (typical) 4 percent annual withdrawals.
  • Consumer debt is a major impediment to savings. The average household carries nearly $7,000 in credit card debt. The interest rates on such debt as to make any savings or investment pointless while carrying a card balance.

Job growth and hints of wage growth lend to optimism about current conditions but no expansion lasts forever and this tepid recovery inspires little faith. Sløk's chart suggests that American families would not fare well under the stress of another Financial Crisis or even of a modest downturn and short recession.

Source: Michael Maiello, "47% of Americans Can't Save Any Money," Daily Beast, April 14, 2015.


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