BUSINESS + ECONOMY

Numbers show spending is up and savings are down

Nov 27, 2023, 6:00 PM | Updated: May 30, 2024, 11:50 am

a person puts money into a piggy bank...

Recent numbers from the U.S. Bureau of Economic Analysis are showing that, since the pandemic, spending is up but savings are down. (Photo: Shutterstock)

(Photo: Shutterstock)

SALT LAKE CITY — Recent information from the U.S. Bureau of Economic Analysis shows spending is up, and savings are down.

Americans are in twice the amount of debt they were in 2019 the agency said. The pandemic seems to be where everything turned around and the spending started, said financial advisor Gary Gygi.

“People started buying things … electronic devices of all types so that [they] could work from home,” Gygi said. “And then, they started fixing up their home so they could work from home in a nicer environment.”

Then savings dropped 63.5% from 2021 to 2022, according to the U.S. BEA and the Federal Reserve Bank of St. Louis.

Despite this drop, Americans were saving more than they normally would because the pandemic prevented people from going out and traveling.

But since then, Americans have changed their spending habits, Gygi said.

“Over the last year, it’s changed from people spending money on things to spending money on experiences,” he said. “So, going back out to eat. Going to places for travel. Things like that.”

And the spending hasn’t stopped since it picked back up.

“The money that people received from the government is starting to wind down,” Gygi said. “So that means, that if they’re going to keep spending, they’re probably gonna put it on credit cards.”

As a symptom of this, household debt has doubled since 2020.

Gygi said the best way to avoid spending more money than you actually have is to live by the 50-30-20 formula.

“You put 50% of the money that you earn towards your needs. That includes mortgage or rent, your utilities and food, ” he said. “30% goes towards wants … Those were the things … that during the pandemic, they bought things. Now, they’re buying experiences. Those are the wants. And, 20% should go towards your savings.”

Related: Holiday shopping delayed as economy bounces back from pandemic

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Numbers show spending is up and savings are down