US households keep spending despite shrinking savings and rising debt
American consumers continue to purchase goods and services even as savings dwindle and household debt grows, raising concerns about financial stability.
July retail and food-service sales rose compared with the previous year, reflecting continued consumer demand despite higher prices and trade uncertainties. Savings rates have dropped sharply, with just a few percent of disposable income being set aside, and a recent survey found many households have less in savings than a year ago. Credit-card debt and other loans have increased, and interest charges on revolving credit are high, turning borrowing into a long-term cost.
Economists note that while the overall economy appears strong, the distribution of debt and the erosion of savings could limit households' ability to absorb shocks. They caution that a slowdown in consumer spending could ripple through businesses, potentially leading to reduced hours or job cuts. The situation highlights a tension between current consumption and underlying financial vulnerability.
