Inflation zaps US savings rate, a warning sign for some

A shopper wearing a surgical mask, center, looks at looks at packaged meats at a Trader Joes in Brooklyn, New York. (Robert Nickelsberg/Getty Images) Americans are saving less, a potentially troublesome sign for the U.S.

economy. The personal savings rate, as a percentage of disposable income, fell to 4.4% in April, the lowest level since 2008 according to the Commerce Department.

Total savings slipped to $815 billion. For some, the decline is a red flag for consumer spending, which accounts for 70% of gross domestic product (GDP).GAS HITS NEW RECORD DURING MEMORIAL DAY WEEKEND"We're starting to dip into savings because what generally happens in periods of inflation is you see demand destruction because prices just get too high and people just stop consuming whatever it is," said Mitch Roschelle, Macro Trends Advisors LLC founding partner. "While we haven't truly seen demand destruction yet, the first thing that happens is people start dipping into savings because they're not willing to slow down consumption."A consumer pays cash for a new iPod nano at the Apple Store on Fifth Avenue in New York. (Chris Hondros/Getty Images) With consumer inflation at a 40-year-high, costs are rising for everything from fuel to food, chipping away at personal balance sheets. INFLATION HITS 8.3% IN APRILAnnual CPI inflation from Jan 2010 to April 2022WALMART, TARGET WARNINGS BAD OMEN FOR STOCKSWhile consumers are still spending, dollars are not going as far.

Walmart and Target both reported a slowdown in sales and profits during their recent quarterly earnings reports because of inflation.