Consumers Have $1 Trillion More Savings Post-Pandemic

published 19 November 2023

To help you understand the rise and fall in the U.S. economy, consumer spending and what that means to GDP growth, as well as what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

It turns out that consumers have more extra savings than economists believed. The latest GDP data indicate Americans have a combined $1 trillion more in savings than what they likely would have had without the jump that was caused by the pandemic when the government sent out multiple rounds of stimulus checks, and people had fewer opportunities to spend money.

That cash hoard has been falling, leading to expectations that consumer spending is bound to take a hit sometime soon. Now it looks like consumers, collectively, are not so close to being tapped out.

However, don’t expect all of those extra savings to get spent. Much of it is in the hands of wealthy consumers, who have likely invested the money or plan to do so. Still, the extra financial cushion will add a bit to GDP growth next year and in 2025.

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This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

David is both staff economist and reporter for The Kiplinger Letter, overseeing Kiplinger forecasts for the U.S. and world economies. Previously, he was senior principal economist in the Center for Forecasting and Modeling at IHS/GlobalInsight, and an economist in the Chief Economist's Office of the U.S. Department of Commerce. David has co-written weekly reports on economic conditions since 1992, and has forecasted GDP and its components since 1995, beating the Blue Chip Indicators forecasts two-thirds of the time. David is a Certified Business Economist as recognized by the National Association for Business Economics. He has two master's degrees and is ABD in economics from the University of North Carolina at Chapel Hill.