Buzz: The typical Californian saved roughly half as much in 2022 than they did in pre-pandemic 2019.
Source: My trusty spreadsheet created a measurement of savings by looking at 2022’s gap between per capita data on incomes (after taxes) and consumer spending in 50 states and the District of Columbia. The tally by the US Bureau of Economic Analysis is a broad tracking of consumer cash flows, including many sources of income (wages, investments and government benefits) and various expenses (from housing to groceries to services to big-ticket consumer goods).
Topline
Why do consumers seem grumpy? Look what’s left over after all the bills are paid.
In California, per-capita incomes were $2,861 more than spending per person in 2022. That “savings” ranked No. 29 of the states and was 19% below the US rate.
The biggest savings were found in South Dakota at $12,644, Wyoming at $10,925 and North Dakota at $10,708. California rival Texas was No. 10 at $6,652. A rebound in energy industries certainly helped these states.
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And please note that expenses exceed incomes in D.C. (by $9,129), Maine (by $2,778), Hawaii (by $1,570), Vermont (by $821) and Delaware (by $113). Florida, another Golden State rival, had a mere $343 in savings.
But what’s likely bugging lots of folks is that this financial cushion thinned in 45 states vs. 2019.
California’s savings dipped by $2,987 between 2019 and 2022. That’s seven-biggest drop among the states – or a 51% drop. Savings were down $1,715 nationally.
The worst change was found in DC, where the shortfall grew by $7,099. Then came Connecticut where savings fell $4,177, and New York was off $4,083. Texans were $1,139 worse off, and Floridians were down $2,291.
Details
How’d we get to this situation?
Californians’ incomes remained high – per-capita income was $63,133 (No. 10 of the states) and 13% above US. Remember, the economy was slowly returning to some odd normalcy throughout 2022.
DC has the highest incomes at $76,603, followed by Massachusetts at $68,874 and Connecticut at $67,460. Texas ($55,734) and Florida ($55,859) were slighly above average.
Yes, a shopping surge is often seen as a sign of consumer confidence. Except when it strains the wallet.
Californians did spend aggressively – $60,272 per capita in 2022, the fifth-highest rate among the states and 15% above what’s spent per person nationally.
Tops was DC at $85,732, Massachusetts at $64,214, and New Hampshire at $60,828. Texans spent $49,082 while Floridians were at $55,516.
It’s simple: income growth – and that included stimulus payments – didn’t keep pace with rising spending. And that’s wrecking many household budgets.
Compared with 2019, California incomes were up 15% (only No. 31 among the states) and the same growth as the US. By the way, Texas was 15%, too, and Florida was up 17%.
Yet that extra cash flow – plus troublesome inflation – boosted per capita spending swiftly in three years.
California expenses jumped 23% – No. 5 – and above the 20% nation growth. Tops? Utah at 28%, Idaho at 26%, and Arizona at 24% – three of the pandemic era’s economic stars. Texas was at 21% and Florida at 23%.
Bottom line
To be fair, 2022 was an economic oddity as folks began readjusted to a post-lockdown life with some remaining stimulus cash to spend.
Still, ponder my spending math as a “savings rate” – the gap between these measures of income and expenses seen as a percentage of that income.
So, Californians saved 4.5% of their incomes in 2022. That’s a lowly 33rd highest among the states. Plus, it’s below the 6% US savings rate.
That’s meager savings, historically speaking: Since 1998, Californians averaged 10% savings and nationwide it ran 9%.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
Source: Orange County Register
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