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US pandemic savings have finally been spent, SF Fed study says

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With retailers noting a slowdown in consumer spending, with many being more cautious about their purchases.

US households have exhausted the pile of cash squirreled away during the pandemic, according to research from the Federal Reserve Bank of San Francisco. “The latest estimates of overall pandemic excess savings remaining in the US economy have turned negative, suggesting that American households fully spent their pandemic-era savings as of March 2024,” San Francisco Fed economists Hamza Abdelrahman and Luiz Oliveira said in a blog post published Friday.

Americans were able to build up extra savings while stuck at home during the pandemic, in part due to extraordinary government support. The reserves are widely thought to have helped the US economy continually defy forecasters’ expectations for a downturn, even as the Fed implemented a historically rapid interest-rate hiking cycle.

 

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