(Reuters) - More than four years after the United States fell into recession, many Americans have resorted to raiding their savings to get them through the stop-start economic recovery.In an ominous sign for America's economic growth prospects, workers are paring back contributions to college funds and growing numbers are borrowing from their retirement accounts. Some policymakers worry that a recent spike in credit card usage could mean that people, many of whom are struggling on incomes that have lagged inflation, are taking out new debt just to meet the costs of day-to-day living.
American households "have been spending recently in a way that did not seem in line with income growth. So somehow they've been doing that through perhaps additional credit card usage," Chicago Federal Reserve President Charles Evans said on Friday.
"If they saw future income and employment increasing strongly then that would be reasonable. But I don't see that. So I've been puzzled by this," he said.
After a few years of relative frugality, the amount of money that Americans are saving has fallen back to its lowest level since December 2007
when the recession began. The personal saving rate dipped in November to 3.5 percent, down from 5.1 percent a year earlier, according to the U.S. Commerce Department.
Jeff Fielkow, an executive vice president at a recycling company in Milwaukee, Wisconsin, contributed less to retirement savings and significantly cut back on dining in restaurants and taking vacations in order to keep college savings on track for his two children. "We would love to save more," he said, "but we're doing the best we can."
There have been some signs of a quickening in U.S. economic growth recently after it emerged from recession in mid-2009.
Hiring was stronger than forecast in December and confidence among consumers rose to its highest level in eight months in January.
But many see a long, hard slog ahead and economic growth this year is not expected to be much more than 2.0 percent, barely up from 2011's growth pace.
The big risks include Europe's debt crisis as well as the shaky finances of many Americans, hit by a five-year decline in house prices and still high unemployment. U.S. consumers account for about two thirds of the country's economic output measured by total spending.
Retail sales rose at the weakest pace in seven months in December, according to data published last week.
Sales in 2012 are expected to grow at slower rate than last year, an industry group said on Monday. The National Retail Federation projected sales would rise 3.4 percent this year, compared with than 4.7 percent in 2011.
"When the stock market and the housing market were booming, we saw that a lot of people would take on more debt and save less. They felt the saving was being done for them," said Mark Vitner, managing director and senior economist at Wells Fargo Securities in Charlotte, North Carolina."Today, the saving rate is falling out of necessity. Food and energy prices have risen and folks don't have as much money to spend on the things that they would like."
Just as Americans used to borrow against the value of their homes before the property crash, now many are taking out loans from their 401(k) retirement savings plans.
Almost a third of plan participants currently have a loan outstanding, according to an upcoming survey of 150,000 holders of 401(k)s by consulting firm Aon Hewitt.
"People are at a loss, and they are struggling," said Pam Hess, director of retirement research at consulting firm Aon Hewitt.continued