How Much Savings Do Americans Have Left?

September 28, 2023

It is widely known that Americans saved big time during the pandemic. Stuck at home during the pandemic, most households stashed their stimulus checks, but as the economy reopened and inflation took hold, that massive stockpile of savings began to be spent down. How much is left is a key question in assessing the health of the American consumer and their ability to keep the economy powering along.

The most straightforward way to see what happened to savings during and after the pandemic is to look at the personal saving rate, which measures the share of after-tax income that does not get spent. In April 2020, the personal savings rate surged to 33.8%, significantly higher than the 8.8% it averaged over the course of 2019. It stayed elevated throughout 2020 and most of 2021, but last year it had fallen just 3.5%. It has seen a slight increase this year, averaging 4.3%.

One way that economists have tried to determine how much of this “excess savings” are still on household balance sheets is to simply add up all of the after-tax income that has not been spent since the pandemic started. Using this methodology, economists at the Federal Reserve Bank of San Francisco calculated that the excess savings peaked at about $2.1 trillion in August 2021, but that by the second quarter of this year, less than $190 billion remained, putting them on pace to be depleted in the current quarter.

Other economists have used a similar approach but arrived at wildly different conclusions. Goldman Sachs economists, for example, have estimated that there were still $1.3 trillion in excess savings as of July, an amount roughly equivalent to 5% of GDP. The Federal Reserve, meanwhile, has its own method to measure savings based on changes in household assets and liabilities from banks and other sources. Fed data shows that savings deposits and other cash equivalents on household balance sheets amounted to $16.8 trillion in the second quarter of this year. That is down from a recent high of $17.5 trillion in the second quarter of 2022, but still up significantly from the fourth quarter of 2019, when it sat at $12.7 trillion.

Still, regardless of the methodology used, it is clear that Americans have spent much of their excess savings, and most economists are now wondering not whether they have enough to keep spending at sufficient levels to avoid a recession, but rather how much of a buffer those savings will provide if we do enter a recession.

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