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Macro Nugget: US Consumers’ Savings Are Far From Depleted

Reevaluating the San Francisco Fed's Assumptions on Household Savings Rates

Recent stories about the depletion of excess savings by US consumers are common, but we challenge the San Francisco Fed’s assumptions. They assume an equilibrium savings ratio of 0.8% per month, a figure not seen since the 1980s. This calculation seems excessively harsh. Considering changes in debt markets and interest rates, a savings rate of 5% per year is more realistic. Interestingly, a 0.4% monthly savings rate suggests US households still have over $3 trillion in excess savings. Contrary to popular belief, US consumers are not depleted of resources.


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