Inflation has eaten away at pandemic savings Americans had managed to put away at times earlier on in the pandemic when they were challenged to go out and perhaps spend.
The saving rate shot up from 8.3 percent before the pandemic to a high of 33.8 percent in April 2020. Now people reportedly are spending their savings and have started to borrow more. In November 2021, the saving rate dropped to 6.9 percent. The savings have continued to decrease since then.
With their savings disappearing, millions more Americans are borrowing money from family and friends. Additionally, Census data indicates that more people are using credit cards to pay for routine expenses.
According to the Census Bureau’s latest Household Pulse survey of finances, 25.6 million people (or more than 10 percent of all adults) depended on loans from those close to them to meet spending needs from March 30 to April 11. That is up from 19.1 million in 2021.
Black Americans showed the biggest increase in borrowing from family and friends. The share increased to about 1 in 6, from 1 in 9 a year earlier, according to the Census study.
Millennials, many of whom carry high student loan debt, head up 40 million households — almost as many as those led by Baby Boomers. Yet millennials hold just 6.4 percent of the total national wealth; Boomers hold more than half of it. Millennials tended to borrow from family and friends more than other generations.
Regions undergoing the fastest price increases saw significant surges in borrowing from family and friends.
The share of borrowers increased to 16.6 percent in Riverside, California, and 14.9 percent in Atlanta. This is about double the figure from the year earlier. These two areas saw the highest inflation rates for U.S. metro areas in the last couple of months.
The Census Bureau has been conducting regular Household Pulse surveys since May 2020, to measure the economic effects of the pandemic on Americans.