News & Insights

Helicopter Money Crashes, Labor Market Cooling, Stealth Edits of Economic Data Continue, and Russia’s Economy Fades

Excess Savings Go Poof!

The strength of the U.S. economy has been surprising this year, creating a mountain of excess savings on household balance sheets. The resilience is due to buoyant consumer demand, fueled by gargantuan pandemic-era stimulus from the federal government, and an absence of routine expenditures during the lockdowns. When households finally deplete their surplus savings, this will remove what has been a durable tailwind for consumption and economic growth over the past two years. Couple this spenddown with the resumption of student loan interest accruing in September and payments restarting in October, and it seems obvious that consumers will be forced to become stingier.