The United States Bureau of Economic Analysis (BEA) announced that consumers are saving at the lowest rate since the pandemic completely affected the economy last year.
The The report shows that the savings rate per person for September was 7.5%, which is a drop of 22. 3 percentage points from an all-time high in April of 2020. The September rate also is a notable drop from the previous month, which was 9.2% .
Although the figures may make thinking that this is negative, financial analysts and experts on the subject assure that this is really good news for the economy. Maria Solovieva, economist and CFA at TD Economics told Yahoo that what is happening is an “indication that things are normalizing.”
Solovieva added that this drop in savings is due, in large part, to the fact that unemployment benefits in the context of the pandemic have already ended since the month September, also due to strong consumer spending in recent months, despite the presence of the Delta variant of the coronavirus.
According to the BEA analysis, the reduction in Savings rate indicates that people now have more places to spend their money, in contrast to what happened earlier in the pandemic, when non-essential businesses had to close .
So most of the people stayed homebound. They could buy some products online, but they couldn’t go out and spend their money on food, entertainment and other services like they used to do when there were no sanitary restrictions.
So when consumers are saving at a rate so high, as it happened in the pandemic, that means they are not spending. Lack of spending means a lack of income for companies . So those businesses have to close and people lose their jobs. So it goes.
According to the current savings rate, the percentage stands at 7.5%, which represents that consumers have returned to save, precisely, at the levels prior to the pandemic . That’s coincidentally the average savings rate in the last 10 years before the pandemic, Solovieva says. And that’s a healthy level, from a macroeconomic perspective.
Spending across the country is expected to increase with the arrival of Black Friday next 26 of November, as well as for the Christmas season, with which many companies will be able to recover economically based on the fact that consumption will skyrocket.
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