How Americans Saved Surprisingly Big During the Pandemic: A Closer Look
12/5/2023
Remember the pandemic? Along with the challenges, something interesting happened with our wallets.
American households – yes, people like you and me – started saving money at record levels. It sounds counterintuitive, right? But there's more to this financial plot twist.
Savings: Where Do We Stand Now?
Fast forward to post-pandemic life. Those sky-high savings have started to dip, sparking a question.
Are we running out of our pandemic piggy banks?
Economists are scratching their heads over this. The debate boils down to how we view that extra cash stashed away during lockdown days.
Here’s the scoop. If we think we need to save more money now than before COVID-19, it looks like our excess savings are nearly gone. But if we stick to the pre-pandemic average (where we saved about 6.2% of our income), the tables turn. We've only chipped away at a quarter of those savings. And as of the end of 2022, regardless of how much you earn, chances are you still have a good chunk of change saved up.
Why Tracking Pandemic Savings is a Big Deal
So, what's the big takeaway? Two things stand out.
First, how we calculate these 'extra' savings depends a lot on what we think the normal saving rate should be.
Second, Americans have been dipping into their savings pretty evenly, from high earners to those making less. We've all been riding out the post-pandemic wave with a surprising level of savvy.
The bottom line?
As we navigate through 2023 and beyond, this peek into our collective financial journey offers both insight and hope. It turns out, we might just be better at this saving thing than we thought.
American households – yes, people like you and me – started saving money at record levels. It sounds counterintuitive, right? But there's more to this financial plot twist.
Savings: Where Do We Stand Now?
Fast forward to post-pandemic life. Those sky-high savings have started to dip, sparking a question.
Are we running out of our pandemic piggy banks?
Economists are scratching their heads over this. The debate boils down to how we view that extra cash stashed away during lockdown days.
Here’s the scoop. If we think we need to save more money now than before COVID-19, it looks like our excess savings are nearly gone. But if we stick to the pre-pandemic average (where we saved about 6.2% of our income), the tables turn. We've only chipped away at a quarter of those savings. And as of the end of 2022, regardless of how much you earn, chances are you still have a good chunk of change saved up.
Why Tracking Pandemic Savings is a Big Deal
Why obsess over these savings? Because they're like a financial cushion. As interest rates climb, knowing how much extra cash people have helps predict how we'll all handle the hike. Plus, it's not just about how much we've all saved – it's about who saved what. This matters, especially for policy-makers planning our economic future.
Savings Across the Income Spectrum
Here’s where it gets really interesting. When we break down these savings across different income levels, we find something heartening. Almost everyone managed to save. And they're using up these savings at about the same rate, regardless of their paycheck size. This tells us something powerful about our collective financial resilience.
The Big Picture: We're More Financially Resilient Than We Thought
Here’s where it gets really interesting. When we break down these savings across different income levels, we find something heartening. Almost everyone managed to save. And they're using up these savings at about the same rate, regardless of their paycheck size. This tells us something powerful about our collective financial resilience.
The Big Picture: We're More Financially Resilient Than We Thought
So, what's the big takeaway? Two things stand out.
First, how we calculate these 'extra' savings depends a lot on what we think the normal saving rate should be.
Second, Americans have been dipping into their savings pretty evenly, from high earners to those making less. We've all been riding out the post-pandemic wave with a surprising level of savvy.
The bottom line?
As we navigate through 2023 and beyond, this peek into our collective financial journey offers both insight and hope. It turns out, we might just be better at this saving thing than we thought.
