Saving Spending: Americans Exhausting Savings as Inflation and Interest Rates Soar

As of mid-January, Americans have spent down 35% of the extra savings they accumulated during the pandemic, according to an estimate from Goldman Sachs.[0] By the end of the year, the company forecasts that they will have exhausted 65% of that money.[1] The extra savings can be attributed to high consumer spending during the pandemic, which reached its peak in 2020 with a rate of 17%, before dropping to 3.4% in 2021.

The decrease in savings is taking a toll on many households due to decades-high inflation, which has caused everyday costs such as groceries and gas to rise.[2] This has forced many to turn to their credit cards, leading to a cycle of debt. Interest rates have also increased significantly, with one consumer citing an interest rate jump from 0% to 10%.

Credit card companies have reported solid consumer spending, but as Ted Rossman from points out, it is leading to more spending and debt.[3] Paula Green, a 60-year-old gig worker, accumulated $4,500 in credit card debt after spending thousands on her daughter’s wedding.[4]

It is still unclear how much tightening it will take to slow down the economy and bring down inflation, according to William English, a former senior Fed economist and finance professor at the Yale School of Management.[5] Karissa Warren, a kitchen manager who was laid off in December, is hoping the added income from her new job will help her and her husband pay off their credit card debt within two years, and eventually buy a home.

0. “Consumers Scramble to Cover Expenses as Savings Dwindle”, 7 Feb. 2023,

1. “Households Burn Through What's Left of Their Pandemic Savings” The Wall Street Journal, 6 Feb. 2023,

2. “With high inflation, are savings out of the picture for American consumers?” Tearsheet, 8 Feb. 2023,

3. “More Americans Turn to Retirement Savings for Cash” Investopedia, 2 Feb. 2023,

4. “Households plunge into debt amid inflation and high interest rates – WEIS | Local & Area News, Sports, & Weather”, 3 Feb. 2023,

5. “Households plunge into debt amid inflation and high interest rates” WBAL Radio, 3 Feb. 2023,