Moreover, despite a rapid drawdown of savings in recent months, there is still a large stock of aggregate excess savings in the economy-some $500 billion. We show that households rapidly accumulated unprecedented levels of excess savings-defined as the difference between actual savings and the pre-recession trend-relative to previous recessions. In this Economic Letter, we examine how household saving patterns since the onset of the pandemic recession compare with previous recessions. As a result, aggregate personal savings rose rapidly, far beyond its pre-pandemic trend and much higher than in previous recessions. economy at a time when health-related economic closures and social distancing led to a significant drop in household spending. Pandemic-related fiscal support resulted in a sizable increase in disposable income in the overall U.S. Updated discussion as of November 8, 2023, in SF Fed Blog Monthly data updates available at Pandemic-Era Excess Savings Estimates suggest that those funds could be available to support personal spending at least into the fourth quarter of 2023. Since 2020, households across all income levels have held a historically large share of savings in cash or other easily accessible forms. Despite recent rapid drawdowns of those funds, estimates suggest a substantial stock of excess savings remains in the aggregate economy. households built up savings at unprecedented rates following the strong fiscal response and lower consumer spending related to the pandemic.
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