The Rise and Fall of Pandemic Excess Savings

Abdelrahman, Hamza; Oliveira, Luiz E.

Journal Article

The Rise and Fall of Pandemic Excess Savings

Abstract: U.S. households built up savings at unprecedented rates following the strong fiscal response and lower consumer spending related to the pandemic. Despite recent rapid drawdowns of those funds, estimates suggest a substantial stock of excess savings remains in the aggregate economy. Since 2020, households across all income levels have held a historically large share of savings in cash or other easily accessible forms. Estimates suggest that those funds could be available to support personal spending at least into the fourth quarter of 2023.

Keywords: covid19; pandemic; savings; excess savings; households; fiscal policies;