While the personal savings rate in the U.S. as a percentage of disposable income has been well below 10% over the past two decades, it recently climbed to multiyear highs. Peaks in 2020 and 2021 roughly coincided with payments of government stimulus checks.
Over the same period, the financial obligation ratio, a broad-based measure of the ratio of household debt payments to total disposable income, declined from levels above 16% throughout the 2000s to a current 20-year low of about 13%.
Another metric we track to gauge the health of the consumer is the rate at which credit card companies write off bad debt. Figure 1 shows that while the unemployment rate climbed to more than 14% during the pandemic as large swaths of the economy were shuttered, credit card write- offs trended lower.