At the beginning of 2022, consumers had almost $2 trillion in extra cash to spend. As 2023 gets underway, that figure has been cut in half.
U.S. consumers have made a healthy dent in savings stockpiles accumulated during the pandemic.New data from JPMorgan Asset Managementshows estimated "excess savings" from U.S. households now stand at $900 billion, down from a peak of $2.1 trillion in early 2021 and roughly $1.9 trillion at the beginning of last year.
Households saved more than 10% of their income in each month between March 2020 and May 2021, building a multi-trillion dollar stockpile of savings to run down in the future., these accumulated savings for consumers have powered robust spending, even in the face of 40-year highs in inflation and a softening labor market.
Writing after last month's report on personal income, Oren Klachkin and Ryan Sweet at Oxford Economics said that "the historically low [personal savings rate] indicates households deployed more of their dry powder."This content is not available due to your privacy preferences. Shepherdson noted the drawdown in savings began last spring, as gas prices weighed on consumers nationwide. By June 2022, theIn Shepherdson's view, it is likely the bottom 40% of earners have run down all excess savings accumulated during the pandemic. This suggest the pace at which consumers spend down their remaining stockpiles will slow, as those on the higher end of the income distribution have more scope to hold off drawing on savings to meet current obligations.
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