Personal savings for Americans dropped to a 10-year low in December even as spending grew, the Commerce Department reported Monday — a trend that echoes one last seen just before the 2008 financial crisis.
Savings declined to $351.6 billion in December from $365.1 billion in November, the department reported. They fell to $485.8 billion for 2017, the lowest level since 2007, Reuters reported.
The December savings represents 2.4 percent of personal income, Commerce reported. As recently as May, personal savings stood at $540.7 billion, or 3.8 percent of personal income.
As savings declined, personal spending increased. Consumer spending increased 0.4 percent last month, the department reported, as wages rose 0.5 percent.
“The saving rate has been on a steady decline since hitting 6.3% in late 2015, as personal spending growth has outpaced a deceleration in after-tax income,” Ellen Zentner, chief U.S. economist at Morgan Stanley, told MarketWatch.com.
One big difference between now and 2008: Recent federal income tax cuts might help push both spending and savings ahead in 2018 as consumers have more money put into their pockets.
There also was good news in the report. Overall, income rose nearly 3.1 percent last year over 2016, the department reported. That boost comes as unemployment sits near 4 percent, the lowest in 17 years.
Consumer spending accounts for 70 percent of all U.S. economic activity, the Associated Press notes.