- Consumers in largest global economies amassed $2.9T in extra savings during lockdowns
- Americans have saved $1.5T and growing
Lockdown Savings Should Fuel Economic Rebounds Globally
With nowhere to go and nowhere to spend money for the last year due to COVID, consumers around the world have accumulated massive savings. Take a look:
– United States $1.5T +7.2%
– United Kingdom L117B +6.0%
– Japan Y32.6T +5.9%
– Germany L142B +5.7%
– France L125B +5.6%
– China Y2.8T +4.3%
– Spain L66B +3.3%
– Italy L54B +2.7%
After converting the various currencies to dollars, the total estimated “extra” savings worldwide is approximately $2.9T, according to Bloomberg Economics.
Half of Global COVID Savings in the US
This estimated “extra” savings of $1.5T Americans have socked away during this pandemic year is more than double the average annual growth of gross domestic product in our country’s last expansion. It is also equivalent to the annual output of South Korea.
Optimists Betting on Shopping Sprees in All Areas of the Economy
Restaurants, retailers, tourism hotspots, entertainment venues, sports events, you name it, are silently crossing their fingers and toes hoping that consumers will open their wallets in the same way that they’re buying houses for the first and/or multiple times and plunking down money for home remodeling and renovations.
If optimists are correct, economic growth could soar as much as 9% rather than the currently projected 4.6% for 2021 GDP, according to Bloomberg Economists. If, on the other hand, Americans continue their newfound pattern of saving, the economy will likely grow just 2.2%.
Of course, not everyone is flush with COVID savings. Lower-income households may have been forced to raid any savings they might have had due to job and wage losses. Others with modest savings may be suspicious about spending what they have managed to put away for “just in case” scenarios.
Economy is Contingent upon Post-Pandemic Behavior
According to Yelena Shulyatyeva, senior US economist with Bloomberg Economics, said, “Short term, a lot depends on post-pandemic behavior…medium term, whether the extra funds go to consumption, paying down debt, or even stay in the bank as a rainy-day fund, that’s a positive for growth.”
Thanks to Bloomberg News and Bloomberg Economics.
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