Many U.S. consumers are starting 2021 flush with savings likely to help fuel the economic recovery this year.
The latest federal Covid-19 aid package sent $600 checks to many households that also received relief money last year, while more affluent households have built up pools of cash by curbing their spending during the pandemic.
Americans saved $1.4 trillion in the first three quarters of 2020, or about twice as much as in the same period of the prior year, according to analysis by Berenberg Economics. That amount is equivalent to nearly 10% of 2019 household spending, estimates Berenberg’s chief economist, Holger Schmieding.
“In this unusual recession, governments have been unusually generous, people have not been able to spend the money, and hence they have the money and will to spend,” Mr. Schmieding said. Once business restrictions are lifted and people feel it is safe to go out again, “there will be a lot of spending—my guess is the beaches will be crowded, the pubs will be crowded” and, “by May and June it will be in full swing,” he said.
President Biden is calling for a new $1.9 trillion Covid-19 relief package to help Americans weather the economic shock of the pandemic. His plan includes $1,400-per-person direct payments to most households and a $400-a-week unemployment insurance supplement through September.
