Americans are putting less than half as much toward their savings as they were a year ago, as they face soaring inflation and incomes that are not keeping up with rising costs.
The latest government data released on Thursday showed the personal saving rate was 2.6 percent in April. That’s dramatically down from the 5.5 percent of disposable income being put away one year ago in April 2025.
At the same time, personal incomes fell in April as consumers have been feeling the squeeze.
It comes as consumer sentiment has hit an all-time low with Americans struggling with the cost of living, including skyrocketing energy prices due to the war in Iran, with no clear end in sight.
Prices are rising at the fastest pace in years. According to the Personal Consumption Expenditures index released on Thursday, inflation rose at 3.8 percent from last year, as was expected by economists.
The gauge is closely watched by the Federal Reserve as it weighs whether to raise or cut interest rates.
The annual pace from April was its fastest since May 2023, when the Central Bank was hiking rates due to soaring inflation coming out of the pandemic, making a rate cut, as the president has been demanding, a tough sell.
The increase in living costs in recent months has been driven in part by rising gas and energy costs.
Gas prices remain elevated as Americans head into the summer months, with the war in Iran driving up prices and shipping at a standstill in the Strait of Hormuz for nearly three months since the U.S. began strikes.
The national average price for a gallon of regular gas was $4.40, according to GAsBuddy.com. The price of diesel was $5.52 per gallon.
Trump has insisted that the prices will plummet once the U.S. reaches a deal to end the war in Iran, but an agreement has remained elusive despite the president’s repeated insistence for months that the deal would be reached soon.
Even if progress is made on reaching an agreement to reopen the Strait, economists have warned that consumers won’t see pre-war prices for months.
Trump’s net approval on inflation is deep underwater. Only 24 percent of voters approve of his handling of inflation, according to Fox News polling, down from 35 percent in January.
A whopping 76 percent disapprove of his handling of inflation. Even a majority of Republicans, 51 percent, disapprove of Trump’s handling of inflation.
