Bottom 80% of US Households Persistently Dissaves-Spending More Than Income
New U.S. data suggest that the bottom 80% of households, by income, consistently spend more than their reported “personal income,” prompting concerns about financial strain, inflation, and rising living costs. Many commenters argue the picture is distorted because the metric excludes capital gains and retirement withdrawals, meaning a large share of this “dissaving” is actually spending funded by appreciating assets, especially among retirees. The exchange broadens into questions about stagnant wages, high food and housing prices, corporate pricing power, and Americans’ long-standing tendency to save less than they could.
Macroeconomic context and interest rates
- Several comments link persistent dissaving to long periods of very low interest rates and easy money (ZIRP, COVID stimulus).
- Some expect behavior to change only if higher rates persist; others note policymakers seem intent on returning both inflation and rates to ~2%, which offers little incentive to save.
- There is disagreement on how both low inflation and low rates can be maintained, and whether tightening is genuine or temporary.
Cost of living and groceries
- Many posts focus on food price shocks: families report grocery bills from ~$900/month (family of 4) to $2,500–$3,000/month (family of 6), with others calling the high end “insanely” above norms.
- Regional variation is emphasized: some low‑COL areas now have big‑city food prices but low wages; comparisons across chains (Aldi, Walmart, Whole Foods, HEB) show big differences.
- Explanations offered include: “greedflation” and oligopolistic grocery consolidation; transportation and energy costs; lingering supply chain issues; and shrinkflation.
Interpretation of “dissaving” and BEA data
- Multiple commenters say the headline is misleading: “bottom 80%” refers to the bottom 80% by measured personal saving, not necessarily poorest households.
- Key point: BEA “Personal Income” excludes realized and unrealized capital gains and many retirement withdrawals. Spending from asset sales or 401(k)s thus appears as “dissaving.”
- Many note retirees, living off accumulated assets, will systematically show up as dissavers. Some view the metric as almost tautological or poorly constructed.
Inequality, wealth effects, and retirees
- Some argue the pattern is mostly richer or asset‑holding households monetizing gains, not wage‑poor households overspending.
- Others highlight that a sizable minority truly can’t cover basic costs (rent, food, healthcare) on income alone.
Behavioral vs structural explanations
- Structural view: stagnant wages, high housing/healthcare/childcare, and asset inflation force many into net‑spending.
- Behavioral view: Americans generally have poor saving habits, heavily influenced by marketing, easy credit, and an absence of recent severe downturns.
- Several note that life‑cycle dissaving in retirement is normal; what’s unclear is how much of the measured dissaving is distress vs planned drawdown.