Survey: Consumer savings slip

More Americans are saving less than a year ago amid fewer concerns over consumer debt, according to new survey by Bankrate.com.

This month, 49% of consumers don’t have enough emergency savings to cover three months living expenses and 28% have no savings. This time last year, those readings stood at 46% and 24%, respectively.

While savings rates are up from the all time low in 2006 the news is not particularly good, according to Greg McBride, senior financial analyst for Bankrate.com.

“With 5.4 million Americans out of work for six months, only one in four has enough savings to weather a period of joblessness that long,” McBride said. “Having sufficient emergency savings is critical to avoiding high-cost credit card debt when unexpected expenses arise.”

Economists say disposable personal income, minus taxes and adjusted for inflation is stagnant thus far into 2012 and consumers are saving less in order to spend more.

“With real wages and salaries now estimated to have grown at only a 0.7% annualized rate in [the fourth quarter and first quarter], and the saving rate revised down, the consumer is clearly in a weaker position than previously reported. Lower gasoline prices will help to cushion the blow, but, as always, the direction of the labor market will be the key variable in coming months,” Joshua Shapiro, chief U.S. economist at MFR Inc., wrote in a May 31 research note.

McBride agreed that household incomes are stagnant with inflationary pressures chewing up what little income appreciation they might be seeing. He added there is some pent up demand to spend after three years of holding back, but spending has come at the expense of saving for many Americans.

McBride said the overall level of financial security among consumers in June is slightly positive according to the Financial Security Index results. Bankrate.com has conducted this survey each month through a telephone poll since since December 2010. He attributed the positive sentiment largely to consumers feeling better about their jobs, if they have one. And he said consumers have moved the debt needle way back in the past two to three years by paying down obligations or seeing debt charged off.

There were two noteworthy improvements in June over the prior month, according to McBride. Some 32% said they were less comfortable with their savings versus one year ago. This was a new low reached on a downward trend since August 2011 when the reading peaked at 47%.

“We also know that 18% said they are less comfortable with their debt today than they were a year ago. This is a new low from the peak of 27% in October and November 2011,” McBride said.

The new survey was conducted by Princeton Survey Research Associates International (PSRAI) and can be seen in its entirety here at Bankrate.com.

DEMOGRAPHIC RESULTS
Retirees
41% of retirees say they have enough to cover at least six months' expenses
26% have less than that
18% have none

Ethnic Groups
38% of nonwhite respondents report having no emergency savings
23% of white respondents have no savings.