Americans are saving faster than they are spending.
It’s a key shift in spending habits that started during the Great Recession. And the trend continues as we head into the holiday shopping season this weekend.
The savings rate in the United States rose to 5.6% in October — its highest mark in nearly three years. In September, the savings rate was 5.3%. Put another way, Americans put aside an extra $40 billion in October rather than spend it.
The personal consumption expenditure, a measure of spending, only rose 0.1% between September and October.
Sometimes when the savings rate goes up and spending is tepid, it indicates that Americans are worried about the economy and won’t loosen up the purse strings.
However, it doesn’t appear that higher savings are foreshadowing fears of a recession. Just Tuesday the Commerce Department announced that the economy performed better than expected in the third quarter. The economy grew 2.1%, higher than the first estimate of 1.5% in October.