In this training video, Dr. Nitin Chhoda explores the dramatic increase in savings rate for the US consumer as a response to the pandemic. We explore:
1. Personal savings rate in the United States over the past 20 years
2. Why it’s higher than ever before today
3. Implications for the future of the economy
When compared with historic trends, a 33% savings rate is extremely high for the average US consumer.
It may drop down and get close to pre-pandemic levels (8%) once this crisis is over. Hopefully, it will encourage us to manage our money better by saving more, and avoiding unnecessary spending.
In this video, we explore the savings rate of the average American, and we take a closer look at people dining in restaurants – date from the OpenTable network including those with online reservations, phone reservations and walk-ins.
If you are worried about what’s coming later this summer and whether you’ll have your job or not, you are not alone.
There is a lot of fear among consumers, especially those who are relying on stimulus checks and unemployment benefits (which are scheduled to end on July 31 at the time this video is being recorded).
The savings rate is an important parameter for GDP growth, and some consider it to be an indicator of future consumer spending because of ‘pent up demand’.
Some believe that consumers have been indoors for a long time, and need to ‘get out there’ and spend money as soon as things get better.
The net result – a surge in spending when the economy recovers.
The high savings rate is an indirect result of the outbreak and the state-mandated business shutdowns and social distancing measures.
People don’t have a way to spend their money (other than online shopping, rent and utilities).
Americans are being forced to eat at home.
Did you know that Americans usually eat out 5.9 times a week on average? This can be expensive, depending on where you live.
Depending on the state, the cost per year of eating out can vary between $2,000 and $4,000 each year! It is therefore best to save as much as you can right now, if you have that option.