Happy Sunday from the beautiful Corfu in Greece!

Last week we learned that the so-called “excess savings pool” from the pandemic had vanished into thin air in the US, or rather that personal savings have been running sub-trend long enough to bring savings back to a normalized state.

This does not mean that US households have run out of savings, it merely means that savings rates are running below trend, which is not out of the ordinary during late-cycle economies. We have recreated the study on German numbers and found much less “alarming” trends in German households, which goes to show that the methodology developed by the San Fran Fed ought to be taken with a pinch, if not even a truckload, of salt.

Concluding that German households are in substantially better shape than US households will probably not win you nobel-prices, but maybe the PhDs at San Fran Fed are looking for ways to underpin the cutting narrative?

Nevertheless, the erosion of US excess savings coincides with an interesting new proposal from Freddie Mac designed to free up equity among home-owners wearing so-called golden handcuffs due to the rising interest rate environment. Are the GSEs about to unleash another 1-2 trillion consumption ticket for US households?

Let’s have a look at the details!

Chart 1a: US excess savings are gone or are they?

Chart 1b: German excess savings are in better shape