Consumption is not hysterical – families in Europe and the United States have hoarded $ 2.3 trillion

Consumers in Europe and the United States are in no hurry to spend more than $ 2.6 trillion on savings accumulated during epidemics. Money does not go to the economy. This holds back the hope that consumption-driven economic growth will increase on both sides of the Atlantic. Savings in the Eurozone’s bank balance sheets declined somewhat in August, following the easing of Govt restrictions in the Northern Hemisphere; Italy also recorded an increase, according to Bloomberg Economics calculations. In the United States, too, the numbers did not show an exit.

On the other hand, the lack of expected increase in consumption by some economists may speak against the risk of a prolonged inflation shock.

Dario Perkins, managing director of Global Macro at DS Lombard in London, said, “We see no signs that bent-up savings are flowing back into the economy. People feel rich and spend a little more because they have extra savings. A portion of that money could be spent, but it will not come back immediately. “

Economists believed the frenzy was buying

According to Bloomberg Economics estimates, the surplus accumulated since the beginning of the crisis is about $ 2.3 trillion in the United States and nearly 400 400 billion in the eurozone.

After all, it is companies and economists who rely on the rise of growth. The European Central Bank, on the other hand, has long warned that funds raised during the lockout should not be “often spent”.

Gonzalo Gortazar, Spain head of CaixaBank, said he expects some of the funds to be bunkered to increase consumer spending in May. The OECD expects European consumption to benefit from the “deregulation and associated decline in household savings”, which “will take a considerable amount of time to do”.

But the data is relaxed. Neither the European Commission’s sentiment indicators nor Great Britain’s figures show such a rise. In the United States, consumer sentiment plummeted in the summer.

One reason for this, according to Deutsche Bank analyst Olga Kotaka, is the inability to cover missed service costs missed during the lock-in period. She said in a podcast. “There is really no pent-up request from all the decisions that were postponed during the lockout.”

People don’t miss certain things

According to an ECB paper, some consumer preferences have also changed permanently. In 2020, many people realized that certain things should not be missed. Where there is demand, the global supply crisis causes shortages of goods, which means you can sometimes not spend the money you have saved.

After all, the big mountain of money is not evenly distributed across all socio-economic groups. The seniors and the already rich are more profitable – but they are often less likely to spend.

“I think most of the savings went to middle- and high-income homes,” said Mark Whitner, an economist at Wells Fargo & Co. “I think there’s a lot more fuel in the tank.”

(Bloomberg / Cash)