Cash Drain On Americans’ Savings Accounts Nears Great Recession Levels

The personal savings rate fell to its lowest level in roughly four years on Thursday as Americans continued to dip into their earnings to pay for increasing prices on goods caused in large part by the Iran war.

The personal savings rate fell to 2.6% in April from a revised 3.2% in March, marking the third straight month of declines, according to Federal Reserve Bank of St. Louis data. The savings rate hit its lowest level since inflation peaked at 9.1% in June 2022 and is approaching levels seen during the run-up to the 2007-2009 financial crisis. 

Americans have turned to credit cards and personal loans to confront higher prices, with credit card debt at $1.25 trillion in 2026’s first quarter, according to the Federal Reserve Bank of New York. Though the figure is a slight downtick from $1.28 trillion in the fourth quarter of 2025, it still marks a sizeable increase from prior years.

Over half of consumers use credit card balances to cover essential spending, a May survey by debt management company Achieve found, with 57% of borrowers saying it would take six months or longer to pay off all their credit card debt.

Around 4.8% of debt was at some stage of delinquency in the first quarter, driven in part by $13.2 trillion in mortgage debt and $1.7 trillion in auto loan balances, New York Fed data shows. Household debt increased $18 billion to over $18 trillion in the first quarter of 2026.

Inflation continued to batter consumers in April, with the personal consumption expenditure index (PCE) increasing 0.4% from March and was up 3.8% year over year, it’s highest increase since 2023.

Gross Domestic Product(GDP) was also revised downward from initial first quarter estimates, the Commerce Department announced Thursday. GDP increased at a rate of 1.6% for the quarter, a revised reading from the department’s initial estimate of 2%.

The naval blockade of the Strait of Hormuz has caused consumers to pay more for products such as fertilizer, steel, oil, sulfur and more. The rising costs of fertilizer has forced Americans to spend their disposable income on food, while experts previously told the Daily Caller News Foundation that the rise in oil prices could be permanent.

Business leaders and market analysts found that consumers were growing concerned with the economy, rising costs and rising mortgage rates. Global business sentiment has decreased since the conflict began, as higher energy prices and lower stock prices were “weighing on [their] confidence.”

A recent Napolitan News Service survey found that 39% of voters in the U.S. trust the Democratic Party more than Republicans on the economy, marking a five-point increase from March. Moreover, 36% of voters say they trust Republicans more, marking a one-point decrease from March and down seven points from February, the poll shows.