And that's great for the economy.
Having a smaller stash for a rainy day may be risky for any one individual, but in the aggregate, theReports from the New York Fed and the International Monetary Fund last week spotlighted the divergence of U.S. savings behavior from that of comparable countries.that since 2022, the U.S. savings rate dropped below its pre-pandemic average — while savings rates elsewhere have remained above their pre-pandemic averages.
IMF analysts wrote in their World Economic Outlook: "Among advanced economies, private consumption has been stronger in the United States than in the euro area, with households receiving larger fiscal transfers early in the pandemic and spending the associated savings more quickly."There's a question about why American consumers are so much more free-spending than their counterparts in other rich nations.
Economists at the NY Fed posit that the divergence could reflect the fact that more American savings came from the federal government transfers to households during the crisis. Some economic theory suggests households are more willing to spendAnalysts at the IMF note that American consumers have also benefited from "being better insulated from the rise in energy prices resulting from the war in Ukraine; and feeling relatively confident amid historically tight U.S. labor markets.
But zooming out a bit, the U.S. is actually doing pretty well, largely because Americans feel good enough to keep spending.Share on linkedin
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