Against a historically low growth environment, the consumer stands out as the engine of the U.S. economy. Consumption accounts for 69% of U.S. growth and is supporting most aggregate demand and revenue generation in the economy.9

Savings rates are decreasing 0 2 4 6 8 10 12 Note: Three-month moving average. Sources: U.S. Bureau of Economic Analysis, FS Investments as of December 29, 2017. CONSUMERS ARE CONSUMING SAVINGS Household savings rate 1985 2017

We will be watching: The household savings rate shows savings as a share of personal disposable income. Now beyond the lows seen in the 1991–2001 expansion, it is closing in on all-time lows seen in 2005. The consumer remains a vital, positive contributor to economic growth. But sluggish wage growth has caused consumers to finance spending by dipping into savings. Positives such as a tight labor market and solid equity market performance are still providing supports for the consumer. But the disappearing pool of savings could cause consumption growth to face headwinds in 2018.

Risks to our view: Consumers may disregard the low savings rate and keep right on spending, leveraging themselves back to levels seen before the Great Recession. This could create risks should interest rates rise significantly, or should the economy eventually slow again.


«Previous economic indicator: Business investment

«Take me back to the start


9 U.S. Bureau of Economic Analysis, as of December 29, 2017.


This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. FS Investments is not adopting, making a recommendation for or endorsing any investment strategy or particular security. All views, opinions and positions expressed herein are that of the author and do not necessarily reflect the views, opinions or positions of FS Investments. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. FS Investments does not provide legal or tax advice and the information herein should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact any investment result. FS Investments cannot guarantee that the information herein is accurate, complete, or timely. FS Investments makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

Any projections, forecasts and estimates contained herein are based upon certain assumptions that the author considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The inclusion of projections herein should not be regarded as a representation or guarantee regarding the reliability, accuracy or completeness of the information contained herein, and neither FS Investments nor the author are under any obligation to update or keep current such information.

All investing is subject to risk, including the possible loss of the money you invest.