The US personal savings rate fell to 2.7% in June, according to the Bureau of Economic Analysis's Personal Income and Outlays report, down sharply from 4.5% a year earlier and far below the long-run average of roughly 8%. In dollar terms, personal saving totaled $646.1 billion in June, even as personal income rose $54.9 billion and consumer spending increased $65.2 billion for the month.
The decline means that out of every $100 in after-tax income, American households are now setting aside just $2.70, compared with roughly $8 historically. The BEA data show spending growth continuing to outpace income growth on a monthly basis even as the headline numbers look modest: real personal consumption expenditures rose 0.4% in June, matching May's pace, while disposable personal income growth slowed to 0.2% from 0.7% the prior month.
Debt is filling the gap
The falling savings rate has coincided with a buildup in consumer debt. Credit card balances stood at $1.252 trillion in the first quarter of 2026, just below the all-time record of $1.277 trillion set in the final quarter of 2025, the highest levels the Federal Reserve Bank of New York has recorded since it began tracking the data in 1999. More than half of Americans carrying a credit card balance, 53%, say they're doing so to cover essential costs like groceries, utilities and healthcare rather than discretionary purchases.
Delinquencies have moved in the same direction. The share of credit card balances more than 90 days past due climbed from 7.6% to 12.8% between mid-2022 and early 2026, a signal that a meaningful slice of borrowers are struggling to keep up with existing balances even as the savings cushion that would normally absorb a shock keeps shrinking. That financial strain has shown up in sentiment surveys too, including confidence readings among Gen X and Boomer households sinking to multi-year lows.
Why the thinning cushion matters
A savings rate this low leaves less room for households to absorb unexpected expenses without turning to credit, and it has historically been associated with softer consumer sentiment. Inflation has stayed elevated alongside the falling savings rate: the PCE price index, the Federal Reserve's preferred inflation gauge, rose 3.7% year-over-year in June even as it ticked down 0.1% from May, meaning real purchasing power gains have been harder to come by even when nominal income grows.
Related: Treasury Bills Near 21% of US Debt, Highest Since 2020
Whether the savings rate stabilizes or falls further will depend largely on whether wage growth and inflation converge in the months ahead. For now, the combination of a shrinking savings buffer and record-adjacent credit card balances suggests many households have less slack to withstand a downturn than they did just a year or two ago.
