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Savings, Labor Productivity, and Household Debt

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Savings, Labor Productivity, and Household Debt 
By Perc Pineda, Chief Economist & VP, Research | AFSA

The personal savings rate has decreased to 4.4% in April – down from 12.6% a year earlier and 33.8% two years prior. The decrease in savings reflects spending among Americans that hasn’t slowed and the effect of inflation on household budgets. As inflation dilutes consumers’ purchasing power, consumers switch to less expensive goods – known as the substitution effect. However, households’ consumption substitution is hampered by lingering supply chain issues including shortages of some consumer necessities   

The labor market remained strong in May—despite higher interest rates affecting business costs—supporting healthy consumer spending. The unemployment rate held steady at 3.6%. The labor participation rate was virtually unchanged at 62.3% and the average hourly earnings rose by 0.3% to $31.95 in May. However, labor productivity decreased by 7.3% in Q1-2022, the largest quarterly decline since Q3-1947, while unit labor costs increased by 12.6% according to the U.S. Bureau of Labor Statistics. The combination of lower labor productivity and higher labor costs—which reflects flawed structural policies in the economy—is unsustainable. Although employment income has not deteriorated so far, expect businesses to freeze hiring or cut staff as the economy slows.  

Household credit access plays a significant role in closing the gap between disposable income and escalating prices. Last year closed with a household debt to GDP ratio in the U.S. at 80.0% in Q4-2021. The increase in interest rate—particularly in home mortgages—could temper household debt growth this year.  

Savings, Labor Productivity, and Household Debt
Jun 07, 2022

Savings, Labor Productivity, and Household Debt 
By Perc Pineda, Chief Economist & VP, Research | AFSA

The personal savings rate has decreased to 4.4% in April – down from 12.6% a year earlier and 33.8% two years prior. The decrease in savingsRead the rest

Auto Finance Data Trends & How One Lender is Ahead of the Game
Jun 06, 2022

Join us on June 9 at 2:00 p.m. ET for Auto Finance Data Trends & How One Lender is Ahead of the Game, presented by Lightico

In this program, we’ll take a look at the latest auto lending consumer survey data to see what consumers are experiencing … Read the rest

AFSA Highlights AAPI Member | Hoan Vo
Jun 02, 2022

May is Asian American and Pacific Islander Heritage Month (AAPI), commemorating the emigration of the first Japanese to the U.S. in May of 1843 and to honor the memory of the many Chinese immigrants who built the transcontinental railroad,Read the rest

June Featured Business Partner: Amsive
Jun 01, 2022

The featured AFSA Business Partner for June is Amsive.

Consumers signal individuality in all kinds of ways. Today marketers must listen and act on those signals. At Amsive, we give you the tools to know more and the services to do more. We giveRead the rest

Understanding the Newest Generation of Bill Payers
Jun 01, 2022

Join us on June 2nd for Understanding the Newest Generation of Bill Payers, presented by PayNearMe.

How do consumers ages 18-29 prefer to pay bills? What causes them to pay late? How does this differ from older generations?

In this webinar,… Read the rest

AFSA Talks Staffing & Retention
Jun 01, 2022

AFSA’s Human Resources Networking Group will host a crucial conversation for members in the month of June. 

Over the past few years, AFSA members have described the increased difficulty in recruiting, training, and retaining the staff needed… Read the rest

AFSA Submits Letter to Bureau on Nonbank Supervision
May 31, 2022

On May 31, AFSA submitted a letter to the Consumer Financial Protection Bureau (CFPB) regarding proposed changes to its Supervisory Authority Over Certain Nonbank Covered Persons. These changes would allow the Bureau to publicize its designation… Read the rest

AFSA Highlights AAPI Members | Kelvin Chen & Marguerite Watanabe
May 31, 2022

May is Asian American and Pacific Islander Heritage Month (AAPI), commemorating the emigration of the first Japanese to the U.S. in May of 1843 and to honor the memory of the many Chinese immigrants who built the transcontinental railroad,Read the rest

New Surveys Cover Refunds, Time-Barred Debt
May 30, 2022

AFSA’s State Government Affairs (SGA) team published two 50-state surveys last week on de minimis refund exemptions and collection of time-barred debt. 

In some consumer credit transactions, the contract may have an excess balance afterRead the rest

AFSA Submits FOIA Request to CFPB
May 27, 2022

The basic function of the Freedom of Information Act (FOIA) is to ensure a transparent and accountable government, which is vital to the functioning of a democratic society. Since 1967 FOIA has provided the public the right to request access… Read the rest

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