American Consumers Have Everyone Fooled — Even the Fed
Contrary to popular belief, households have not been spending beyond their means, depleting their savings or turning to credit cards in desperation.
Consumers are doing just fine.
Photographer: Seth Herald/AFP via Getty Images
For more than a year now, there’s been no shortage of economists declaring that the US consumer was nearly tapped out, having run through pandemic-era fiscal largesse while inflation raged. As a result, a recession was just around the corner. Time and time again, though, American households have proven those forecasts wrong. Now, a major revision to government data on personal income and savings reveals why.
The updated numbers reveal a consumer with some $400 billion more in earnings since 2019 along with more prudent spending than previously reported. Crucially, the revisions confirm that the massive savings buffer households built up during the pandemic remains largely intact. In terms of the numbers, Americans are socking away $100 billion a year less than they did before the pandemic, which is worrisome but not as apocalyptic as the $830 billion less that was first reported.