Market Commentary 4/19/22

U.S. Savings Rate

The U.S. personal savings rate jumped to an all-time high of 33.8% in April 2020. Stimulus checks, enhanced unemployment benefits, and a decline in consumer spending all boosted personal savings during the pandemic. Additionally, homeowners were able to lower their monthly mortgage payments by refinancing their home loans and locking in mortgage rates below 3% on 30-year loans. The increased personal savings sustained consumers during the pandemic and helped many individuals pay down debt.

As we enter the second quarter of 2022; however, the consumer savings has continued to decline since the April 2020 peak.  This January’s personal savings rate of 6.1% was the lowest level since December 2013, a dramatic decrease in just two years. This decline can be attributed to several factors including the removal of the pandemic-related fiscal stimulus. The last round of stimulus checks was released over a year ago. Also, enhanced unemployment benefits lapsed as the unemployment rate dropped to 3.6% during March 2022. Additionally, consumer spending on services has rebounded as social distancing restrictions are lifted.


Another factor pressuring the personal savings rate is the rise in inflation. The Consumer Price Index, a broad measure of inflation, soared 8.5% year-over-year during March 2022. This was the fastest annual pace since December 1981, and a significant change from the 2010s when annual inflation held steady around 2%.

Given all the above, it is not surprising that inflation has become a popular topic in financial and mainstream media. Many are concerned about rising prices and the impact they have on consumer spending. Please keep in mind that these economic indicators measure only a point in time and are backward looking. It would not surprise us if, toward the end of this year, we are discussing a decline in the inflation rate. It is worthwhile to keep times frames in perspective.

Our team continues to stress the importance of establishing a balanced investment strategy based on your long-term goals, and not letting emotions or the day’s headlines derail these plans. We are always available to discuss your individual portfolio.

Have a good week,

Dennis P. Barba, Jr.
President & Managing Partner

Michael P. Finkelstein, CFA

Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The report herein is not a complete analysis of every material fact in respect to any company, industry or security. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Any market prices are only indications of market values and are subject to change. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request. CAR-0422-02474

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