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People have $5.4 trillion in excess savings, report estimates, and they are getting ready to spend

Consumer Prices
Posted at 4:15 PM, Apr 19, 2021
and last updated 2021-04-19 16:16:18-04

Around the world, a year after the coronavirus pandemic shut down economies and forced millions to stay at home, there are reports consumers have saved a combined nearly $5.4 trillion.

Roughly $2.6 trillion of that was extra savings here in the U.S. It's considered "extra" savings because it is above the normal level of savings researchers would expect to see.

The excess savings could lead to a spending boom as businesses and travel open back up as pandemic restrictions lift.

The estimates come from the credit rating company Moody’s, as they look at additional savings through March 2021 compared with the 2019 spending pattern, according to the Financial Times.

“We expect approximately one-third of the global excess saving will be spent this year,” Moody’s Analytics chief economist Mark Zandi told CNN.

The Organization for Economic Co-operation and Development estimates households in this country have gone from saving roughly 6% of their current income to saving about 16% during the pandemic. Similar jumps in increased savings were seen in countries around the world.

Meanwhile, global consumer confidence is rising sharply after a year of pandemic closures, and people are ready to spend their savings.

"The combination of an unleashing of significant pent-up demand and overflowing excess saving will drive a surge in consumer spending across the globe as countries approach herd immunity and open up," Zandi told CNN.

Earlier this month, the New York Federal Reserve released a study showing Americans used their latest stimulus checks to mostly pay down debt and build up their savings.

According to the report, households used about 41% of the relief payment toward savings, and spent just under 25% of the checks, on average.