From the Federal Reserve Bank of San Francisco's SF Fed Blog, November 8:
Data Revisions and Pandemic-Era Excess Savings
A comprehensive data revision shows the amount of pandemic-era excess savings still available in the U.S. economy may be larger than previously estimated—and is likely to last into the first half of 2024.
Earlier this year, we examined household saving patterns since the onset of the pandemic recession (Abdelrahman and Oliveira 2023a). Our study showed that, relative to previous recessions, households rapidly accumulated unprecedented levels of excess savings—defined as the difference between actual savings and the pre-recession trend—that amounted to about $2.1 trillion. In a subsequent update, our analysis suggested that pandemic-era excess savings were on track to be fully depleted during the third quarter of 2023 (Abdelrahman and Oliveira 2023b).
However, the Bureau of Economic Analysis (BEA) released a comprehensive update to its national economic data on September 28, which significantly expands our estimates of excess savings. This update included revisions to household spending and savings data since 2013. The BEA typically conducts its comprehensive updates every five years to incorporate the U.S. Census Bureau’s latest Economic Census results–the building blocks of BEA’s economic estimates–and to implement methodological changes when needed (Bureau of Economic Analysis 2023).
The BEA data update shows noticeable changes in household disposable income and spending before and after the onset of the pandemic recession. The revised data suggest that a larger fraction of aggregate excess savings remains in the economy than previously estimated.
Our updated estimates suggest that households held about $430 billion of aggregate excess savings by September 2023, and these excess savings are likely to continue being drawn down into the first half of 2024. To help track how this evolves, we have launched a monthly data page, “Pandemic-Era Excess Savings.”
Revisions show lower pre-pandemic savings trend....
....MUCH MORE
