Savings getting tapped by Americans to make ends meet due to inflation

2.21.23 - Unrelenting inflation continues its advance

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Savings getting tapped by Americans to make ends meet due to inflation -Fox Business

Unrelenting inflation is continuing to take a toll on Americans.

About 27% of U.S. households reported taking money out of savings in order to make ends meet, according to new data published in the Country Financial Security Index. More than half of the respondents - about 54% - who tapped their savings said they did so in order to pay for basic expenses like groceries and rent.

"Inflation has shredded household budgets over the past two years, and not just when it comes to one-off discretionary expenses or special occasions, but for keeping up with day-to-day bills," said Greg McBride, chief financial analyst at Bankrate.com.

Millions of Americans stashed away extra cash during the pandemic as a result of multiple stimulus checks, boosted unemployment benefits and limited spending options, but those savings are quickly dwindling.

Americans have spent down about 35% of the extra money they accumulated during the pandemic as of mid-January, according to one estimate from Goldman Sachs. By the end of the year, the bank projected that households will have spent roughly 65% of that money.

The data comes as Americans continue to confront the hottest inflation since the 1980s. The Labor Department reported this week that the consumer price index rose 0.5% in January - faster than expected - and is up 6.4% over the past 12 months. While that is down from a peak of 9.1% recorded over the summer, it remains about three times higher than the pre-pandemic average.