US Household Savings 2-Year Downtrend: Will Anything Be Left for Crypto Investing?

Household savings in the United States are plummeting with another fall for the 23rd month in a row. With debts surging and disposable cash diminishing, less will be available for retail crypto investments. 

Excess household savings in America have fallen for 23 straight months, according to a September 4 report by macroeconomics analysis outlet The Kobeissi Letter.

No Savings for Crypto

It added that since 2022, excess savings in the US have been falling by $100 billion per month on average.

Just over two years ago, Americans had a record $2.1 trillion in excess savings, it noted before adding that current estimates put savings at just $190 billion.

According to the US central bank, the future is looking grim for many as savings are likely to be totally depleted before the end of the year.

“The San Francisco Fed estimates that remaining household savings will be depleted this quarter.”

US excess household savings. Source: X/@Kobeissiletter

The chart shows that households are drawing down excess savings accumulated during the COVID-19 pandemic.

However, consumer spending has been increasing over the past couple of months, suggesting that people are dipping into their savings.

According to EY-Parthenon chief economist Greg Daco,

“Consumers spent freely in July even if it meant dipping into their savings amid slower income growth.”

Read more: 2023 US Banking Crisis Explained: Causes, Impact, and Solutions 

Credit Card Debt and Crypto Market Outlook 

Spending and not saving usually has one outcome — bigger debts. According to a note from ING Economics last week, spending habits are unsustainable, and a decline in consumer spending is likely coming in early 2024. 

ING’s chief international economist, James Knightley, commented:

“The problem is savings are finite and the banks are tightening lending standards significantly. Credit card borrowing costs are the highest since records began in 1972 so there is going to be a lot of pain out there.”

In August, BeInCrypto reported that credit card debts in the US had reached a record $1 trillion.

With less savings and more debt, US retail investors will have less available cash to put into high-risk assets such as crypto. This could drag the crypto winter deep into 2024 unless impetus comes from other regions such as Asia.

Crypto markets returned to their state of lethargy over the weekend, with total capitalization hovering around $1.08 trillion.

Crypto Market Cap Chart. Source: CoinGecko
Crypto Market Cap Chart. Source: CoinGecko

All gains from the Grayscale court victory pump have been wiped out as Bitcoin and its brethren returned to support zones.

BTC is currently trading up 0.5% on the day at $25,984, climbing from an intraday low of $25,800. Meanwhile, ETH remains flat on the day at $1,637 at the time of writing. 

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