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The coronavirus pandemic has wiped out millions of jobs in the United States, but it has had the unexpected effect of raising savings rates for Americans, especially wealthy people stuck at home and forced to give up their jobs. travel and entertainment.
Along with the dramatic reduction in leisure spending, items such as government stimulus checks, unemployment benefits, and the suspension of monthly loan repayments for lower income earners have inflated Americans’ bank accounts that are commonly known. to collapse under debt.
Americans have racked up $ 1.8 trillion in excess savings in the 11 months since the start of the pandemic, according to figures released this week by Barclays and Oxford Economics.
“And we estimate that number could reach 2.5 trillion dollars by this summer,” Gregory Daco, chief US economist at Oxford Economics, told AFP.
Americans’ savings rate, which averaged seven to eight percent before the crisis, hit a record 33 percent in April 2020, thanks to a massive $ 2.2 trillion Covid relief program for households and businesses, according to data from the Bureau of Economic Analysis.
The savings rate stood at 13.7% at the end of December, but fell as various forms of aid expired.
It jumped to 20.5% in January after $ 600 stimulus checks were included in a $ 900 billion plan passed by Congress in late December.
And, it could rise again this spring, as lawmakers contemplate the Biden administration’s $ 1.9 trillion relief package.
Overall, the saving trend has highlighted the disparities between rich and poor in the United States, with wealthy households saving far more than families with modest means who have been hit the hardest by the losses. jobs and used the stimulus funds primarily to pay their bills.
The wealthiest Americans have generally been able to keep their jobs through telecommuting – their incomes have remained constant while spending plunged, resulting in excessive savings.
“About four in ten Americans (42%) say they have spent less money than usual since the start of the pandemic, and this is especially the case among high-income adults,” according to a survey from 10,334 Americans by the Pew Research Center, released Friday.
Some 53 percent of high-income Americans reported spending less, compared with 43 percent of middle-income people and 34 percent of low-income people.
While financially secure people were unable to spend on leisure and travel, low-income Americans reported spending less because they worried about their personal finances.
– Euphoric consumption? –
“Many Americans were already struggling to save money before the coronavirus epidemic hit,” Pew said, with 47% of low-income adults unable to save, compared to 25% of those in middle income .
Only eight percent of high-income Americans had the problem.
Savings rates were even more uneven when broken down by race, with 38% of black adults saying they are generally unable to save, compared to 31% of Hispanics, 27% of white respondents, and 19% Asians, according to data from Pew.
The fundamental question remains: whether the record savings rate will boost consumption in the United States, where consumption has historically been the engine of the economy.
Before the pandemic, it represented two-thirds of GDP.
“Our outlook assumes a fairly rapid acceleration in household spending over the coming year and we make the explicit assumption that households will dip into the savings accumulated in the process,” Barclays economists said.
They noted the potential for “a substantial rebound in post-pandemic consumption if households enjoy greater benefits – akin to ‘euphoria’ – from consuming after a period of deprivation.”
Daco isn’t so sure. As he anticipates a rebound in consumer activity, he noted that spending on things like travel is unlikely to skyrocket at a rate that compensates for the year-long shortfall.
“Are we going to take all the trips that we would have liked to have taken last year, in addition to those planned once the pandemic is over?” Are we going to travel business class or first class on the pretext that we have more money stashed? ”He asked.“ Not necessarily. ”
© 2021 AFP