U.S. savings rate hits record 33% amid coronavirus

Yahoo Finance’s Sibile Marcellus joins Akiko Fujita to discuss how the U.S. savings rate hits 33% as coronavirus causes Americans to stockpile cash.

Video Transcript

AKIKO FUJITA: Welcome back to "Yahoo Finance Live." We are awaiting a press conference to begin within minutes out of the Rose Garden. President Trump expected to take to the podium. We are expecting him to speak or make some kind of announcement about China after the Chinese parliament yesterday passed that national security law which tightens restrictions or control on Hong Kong.

At the same time we're certainly, of course, tracking a lot of headlines. So the president expected to speak on a number of issues. We're going to bring that to you live as soon as it begins.

Meantime, we've got a new study out today. Fears of financial instability prompting Americans to hang on to their cash longer than ever before. Sibile Marcellus joins us with an eye-opening new government study that points to an increase in personal savings. Sibile?

SIBILE MARCELLUS: That's right, Akiko. So the US' personal savings rate hit a record 33% in April. And a big reason for that is fear and uncertainty regarding the economic environment that Americans are living in right now, and also about the coronavirus pandemic.

Will there be a second wave in the fall? What are people supposed to do? Are they supposed to trust the reopenings that are happening across different states or should they shelter at home as much as possible? So all of that is contributing to this record savings rate.

And the concern now is, will Americans continue to save even when the coronavirus pandemic fades? Or will they, once they see that the health threat is gone, they will rush back to the stores and really help stimulate the US economy? Because as we know, consumer spending accounts for about 70% of GDP.

Now, one of the biggest savers are baby boomers, because many of them are near retirement or at retirement. So they're hanging onto as much money as they can, because they don't know what the future holds.

Now, a big part of this conversation obviously has to be about unemployment, the fact that more than 40 million Americans have lost their jobs. So it's only natural that if they got a stimulus check, they're holding onto it. Unemployment, they're trying to save it as much as possible.

And in order for the US economy to really get back to pre-crisis levels, we're going to have to figure out a way to get these more than 40 million people back at work.

AKIKO FUJITA: Yeah, no question about that. We should point out, we did get some data on the spending front today. Consumer spending fell by a record 13.6% in April, but personal income increased by 10 and 1/2%. And to that point you just made, in terms of the study that really points to sort of the sentiment among Americans right now, with so much uncertainty around the economy.