Think About This
INVESTMENT RESEARCH
EXCESS US PERSONAL SAVINGS
$ Billions
$ 600
$ 500
$ 400
$ 300
$ 200
$ 100
$ 0 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20
Pre-Covid level
Excess savings
With fear and lockdown limiting discretionary spending , US citizens saved at the highest rate in decades (> 30 %). We have estimated the cumulative savings made and think they exceed $ 1 trillion . In theory these savings could act as a buffer to supplement income for several months , keeping households afloat well into the new year . But we don ’ t think spending decisions are being made in a vacuum .
Fresh restrictions and an economy stalling out 10-15 % below 2019 levels suggest to us caution will prevail . This creates a negative feedback loop , causing permanent damage to businesses and the employees that serve them . In other words , static spending at current levels and any delay to the stimulus package keeps unemployment high and the risk of corporate bankruptcy elevated . The ongoing pandemic , without stimulus to bridge the gap , inflicts increasingly permanent damage . We see evidence of this effect emerging in confidence numbers , high frequency employment data and real time data on activity .
US RECOVERY TRACKER
100
January 31st = 100
80
60
40
20
0 01 / 31 02 / 28 03 / 27 04 / 24 05 / 22 06 / 19 07 / 17 08 / 14 09 / 11
Financial Mobility Production Employment Demand Health Recovery Tracker
Sources : Oxford Economics , Deltec www . deltecbank . com Deltec Bank & Trust Limited