Which consumers are sitting on a stash of cash?
|Summary
- Consumer spending was constrained last year by restrictions on activity to curb the spread of the virus. In general, household incomes far outpaced overall consumer spending globally, and as a result, households across major economic regions are sitting on unusually large piles of cash.
- Excess household savings accumulated over the past year amount to anywhere between 4% to 9% of GDP in the United States, Canada, Japan, United Kingdom and the Eurozone. Large amounts of savings suggest many major economies appear well-placed for a consumer-led recovery once they are fully reopened.
- The United States and Canada appear the most well positioned, and to a slightly lesser extent the United Kingdom. The consumer recovery may lag in the Eurozone and Japan, however, due either to less robust income trends or a slower reopening of the economy.
- Although consumers appear to be sitting on record levels of excess cash, the figures in this report likely represent upper bounds. To the extent that the shock to household balance sheets from the pandemic causes households to save move even after the crisis passes, we would see some, but not all, of the excess savings accumulated during 2020 be drawn down.
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