National Savings Rate Falls Back to Pre-Pandemic Levels

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That’s how little disposable income people kept in their savings in September—the lowest monthly savings rate since before the pandemic and a sign that things are starting to normalize, according to economists.

The national savings rate—a monthly measure as high as 33.8% early in the pandemic—fell from 9.2% in August and is now back to where it was before anyone had heard of COVID-19, data from the Bureau of Economic Analysis showed Friday.

When lockdowns triggered by the threat of catching the contagious virus sent unemployment rates to unprecedented levels, it also triggered several massive rounds of government assistance, some of which went to most of the country, not just to people who were out of a job. That, combined with fewer opportunities to travel, eat out, and otherwise spend, led to the surge in the savings rate. But as the economy has recovered, these relief and economic stimulus measures have wound down, and in September, the savings rate fell to typical pre-pandemic levels for the first time because people spent more and took in less than in August. 

What isn’t back to normal? The extra savings many households have accumulated over the last year and a half, estimated by some at more than $2 trillion over what they would have saved had we not had a pandemic. It’s one reason many analysts are optimistic that consumer spending will help power the economic recovery despite disappointing growth in the third quarter.

“Households are now starting to dip (a toe) into a massive cache of savings,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a commentary. “Plenty of fuel to drive spending in the quarters ahead.”

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  1. Bureau of Economic Analysis. “Table 2.6. Personal Income and Its Disposition, Monthly.”

  2. Bureau of Economic Analysis. “Personal Income and Outlays, September 2021.” Page 6, Row 44.

  3. Bureau of Economic Analysis. “Personal Income and Outlays, September 2021.” Table 1.

  4. TD Bank. “Where the Road of Excess [Saving] Leads.”

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