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| Global consumers squirreled away over $5 TRILLION in savings during Covid pandemic – Moody’s | Global consumers squirreled away over $5 TRILLION in savings during Covid pandemic – Moody’s |
| (about 2 months later) | |
| Households around the globe have accumulated $5.4 trillion in additional savings compared with 2019's spending patterns, Moody’s has said. That equates to more than 6% of global gross domestic product. | Households around the globe have accumulated $5.4 trillion in additional savings compared with 2019's spending patterns, Moody’s has said. That equates to more than 6% of global gross domestic product. |
| According to the rating agency, booming global consumer confidence suggests people will be willing to spend again as soon as shops, bars and restaurants reopen when coronavirus restrictions are eased. | According to the rating agency, booming global consumer confidence suggests people will be willing to spend again as soon as shops, bars and restaurants reopen when coronavirus restrictions are eased. |
| “The combination of an unleashing of significant pent-up demand and overflowing excess saving will drive a surge in consumer spending across the globe as countries approach herd immunity and open up,” said Mark Zandi, chief economist at Moody’s Analytics. | “The combination of an unleashing of significant pent-up demand and overflowing excess saving will drive a surge in consumer spending across the globe as countries approach herd immunity and open up,” said Mark Zandi, chief economist at Moody’s Analytics. |
| The agency estimates that if consumers spend about a third of their excess savings, they will boost global output by just over two percentage points both this year and next. | The agency estimates that if consumers spend about a third of their excess savings, they will boost global output by just over two percentage points both this year and next. |
| Zandi said excess saving was highest in developed economies, particularly in North America and Europe where lockdowns have been widely implemented and government spending has been high. | Zandi said excess saving was highest in developed economies, particularly in North America and Europe where lockdowns have been widely implemented and government spending has been high. |
| In the US alone, households have stacked more than $2 trillion in extra savings, even before the $1.9 trillion stimulus program by President Joe Biden was launched. Statistics, however, show that savings have been largely accumulated by richer households in all regions. | In the US alone, households have stacked more than $2 trillion in extra savings, even before the $1.9 trillion stimulus program by President Joe Biden was launched. Statistics, however, show that savings have been largely accumulated by richer households in all regions. |
| Goldman Sachs economist Jan Hatzius told the Financial Times that according to his estimates nearly two-thirds of US excess savings were held by the richest 40% of the population. He suggested this could hold back the scale of the economic boost because “high-income households will hold [rather than spend] the bulk of excess savings.” | Goldman Sachs economist Jan Hatzius told the Financial Times that according to his estimates nearly two-thirds of US excess savings were held by the richest 40% of the population. He suggested this could hold back the scale of the economic boost because “high-income households will hold [rather than spend] the bulk of excess savings.” |
| Adam Slater, lead economist at Oxford Economics, was quoted by FT as saying: “If excess savings are mostly held by wealthier households and these are treated as a wealth increase rather than an income addition, we would expect a much lower level of [additional] spending.” | Adam Slater, lead economist at Oxford Economics, was quoted by FT as saying: “If excess savings are mostly held by wealthier households and these are treated as a wealth increase rather than an income addition, we would expect a much lower level of [additional] spending.” |
| For more stories on economy & finance visit RT's business section | For more stories on economy & finance visit RT's business section |