A historic drop in interest rates is helping U.S. households save more than $3,000 a year on average, allowing consumers to spend more even as their earnings fall, a USA TODAY analysis finds.
Americans spent 5.8% of their after-tax income paying interest on mortgages, credit cards, car loans and other debt, according to the latest data from the Bureau of Economic Analysis. That's the smallest share since 1977 and a steep drop from a record high of 9.1% in 2007.
The result: Low interest rates are reshaping household budgets and consumer spending, showing the economic force of the Federal Reserve's unprecedented effort to reduce mortgage and other long-term rates to restore an economy that was near collapse four years ago.
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