Great Lakes Wire

When the COVID-19 pandemic broke out across the nation, lockdowns and stimulus checks helped many U.S. households build up extra savings. Now that the pandemic has eased and lockdowns have long since been lifted, inflation has set in, causing prices to soar and forcing Americans to turn to those pandemic savings to keep up with rising costs. And if recent polls are any measure, they are placing the blame on President Joe Biden. 

The Wall Street Journal (WSJ), citing data from Moody’s Analytics, recently reported that U.S. households saved $2.7 trillion from the start of the pandemic to the end of 2021, primarily because the lockdowns left them with nowhere to spend money and increased income from a trio of stimulus payments. Now, six months into 2022, inflation may be cutting into those pandemic reserves. 

"The personal saving rate, a measure of how much money people have left over after spending and taxes, reached 5.4% in May," the Journal said in its report. That is below the average of the last 10 years and well off the 34% mark in April 2020 during the first months of the pandemic, data from the Bureau of Economic Analysis (BEA) showed.

Last month, the U.S. Bureau of Labor Statistics (BLS) released 12-month data on the Consumer Price Index for the year-long period ending in May. The data showed an 8.6% increase in prices, up 0.3% over the previous month and a 40-year high, driven mostly by rising prices in food, shelter and gasoline. The information for June will be released in the coming weeks.

As increasing prices for fuel, shelter and food drive inflation, Midwestern states, including Michigan, experienced an average increase of 1.5% in May, BLS data said. Over the last 12 months, the Consumer Price Index for all urban consumers rose 8.8% in the region.

The country’s rate of inflation recently reached a mark not seen in four decades, the WSJ report said. With wage gains dropping off, American consumers have been forced to turn to their savings accounts to meet those rising expenses.

Again citing Moody’s Analytics data, the WSJ report noted that amid inflation Americans have used an estimated $114 billion of their pandemic savings to date. In June, Jamie Dimon, CEO of JPMorgan, said in the report that consumers still have from six to nine months of savings to fall back on. 

The escalating prices also have Americans playing the blame game, with Biden feeling the heat. In June, an Ipsos report noted that just 37% of Americans approve of the president’s handling of the economic recovery. That figure has been steady in recent months, but it is down 3% from April and 16% from a year ago. 

The Ipsos survey also found that just 28% of Americans approve of the president’s handling of inflation, and 27% approve of his efforts on gasoline prices. Among Democrats, the survey showed 56% approve of his handling of inflation, while 51% approve of his handling of gas prices.