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: Americans’ personal savings have fallen off a cliff. Brace yourself for just how much they have declined.

As red flags go, this is a big one.

The personal savings of Americans have plunged this year, hitting $629 billion in the second quarter of 2022, according to the Federal Reserve Bank of St. Louis. That’s down from $1.98 trillion in the second quarter of 2021, and $4.85 trillion in the second quarter of 2020, boosted by COVID-related government cash. But it’s also down from $1.41 billion in the second quarter of 2019, before the pandemic.

Economists have been warning of a recession as the Federal Reserve continues to increase interest rates in an attempt to cool 40-year-high inflation. During the early days of the pandemic, several government programs, including enhanced child tax credit payments, unemployment benefits and generous stimulus checks, helped boost personal savings. With the end of those programs, savings have plummeted.

In fact, the personal saving rate — meaning personal saving as a percentage of disposable income, or the share of income left after paying taxes and spending money — fell to 3.5% in August, according to the Bureau of Economic Analysis. It’s quite a U-turn: The personal saving rate recently peaked at 26.3% in March 2021 and 33.8% in April 2020. But the drop in the personal saving rate isn’t all pandemic-related: In January 2020, before the coronavirus pandemic, it was 9.1%.

“Automate your savings and cut down on spending.”

Economists say it’s not all doom and gloom: There are opportunities to boost savings. With 3.5% unemployment in September, the labor market is strong. What’s more, the U.S. added 263,000 jobs in September, although that was the smallest gain in 17 months. And while the rise in average hourly earnings over the past year slowed to 5% in September from 5.2% in August, it’s still one of the fastest increases since the early 1980s.

By most economists’ predictions, a recession is not expected to arrive until next year. Americans who are struggling to pay for rent, utilities and groceries have time to boost their savings, experts say. Among their pieces of advice: Prioritize paying off high-interest debt; keep track of spending, whether you use credit or debit cards or cash; and look to a nonprofit organization like the National Foundation for Credit Counseling over for-profit debt-settlement companies.

Consider buying generic brands, cut down on eating out and shop at cheaper supermarkets. “Take advantage of ‘buy nothing’ groups and thrift shops,” Rossman added. “Repurpose what you already have. Do it yourself if you can, or swap skills and tools with a friend or neighbor. Repair instead of replacing. Get another year out of that car or cellphone or appliance. Every little bit counts.”

Read next: Yes, you can prepare for a recession — even if you’re struggling to pay for rent, utilities and groceries. Follow these steps now.

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