Economic ruin is the story of most corners of the U.S. economy. Unemployment is at record highs. Main streets are closed down, burnt down, and boarded up. Families are lined up for free food. States are seeing record applications for food stamps. Thousands of businesses closed by government lockdowns will never reopen.
Yet there’s one regard in which people, taken as a whole, are flush: our piggy banks.
The personal savings rate in the United States hit the highest level ever recorded during the coronavirus lockdown.
In a typical month, people put somewhere between 6% and 9% of their disposable incomes into savings. In February, the number stood at 8.2%. In March, the savings rate spiked to 13.1% before, in April, skyrocketing to 33%.
That means that for every $2 of disposable income spent in April, the public socked $1 away. It turns out that when the bars and roller rinks are closed, people soon run out of things to spend money on. You can only buy so many gadgets on Amazon, and after you’ve stocked up on toilet paper, hand sanitizer, and Clorox wipes, you have a few pennies left to stick in the old savings account.
Frugality is just one more example of old-fashioned virtues in this novel lockdown. The New York Times wrote about an affluent neighborhood in California where neighbors have returned to stoop-sitting and — get this — talking to one another in person. Going for walks and spending time with the family are on the rise.
Now, none of this is wonderful. We’re not spending because we can’t. We’re seeing our children but not our parents or our grandchildren. But economists hope that the amount of saving in the springtime will lead to a robust economic impact by fall.
But Amazon and those retailers that count on us spending 91% to 94% of our disposable income might start to worry soon that frugality will become a habit.
