As the cost of living rises, Americans are likely to dip into their savings to weather the storm

Key insights about US consumers from Deloitte’s State of the Consumer Tracker

• Inflation rose to 9% in June from 8.6% in May, demonstrating that inflation has likely yet to peak. This unabated surge in inflation is likely deteriorating consumers’ purchasing power, with real weekly earnings down 5.6% since end-2020 despite a 6.6% rise in nominal earnings. Consequently, these events have dented consumer spending intentions. The share of Americans delaying large purchases is rising (figure 1). Planned discretionary spending, too, is on a decline (figure 2).
• The rising cost of living has also emerged as a factor in concerns about savings, with the share of Americans worried about their current savings nearly doubling since March 2021 to 61% (figure 3). And although the overall percentage of those concerned about upcoming payments has remained relatively stable, the figure is gradually rising for lower-income consumers (figure 4). That is hardly surprising, given inflation tends to hit low-income individuals harder than others.

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