That real liquid assets are high but falling fast explains why spending remains strong but voters remain concerned
Shoppers are shown in Columbus, Georgia, US, in this September 2020 file photo. Picture: REUTERS/ELIJAH NOUVELAGE
Liquid assets accumulated at a record rate in 2020 and 2021 because of pandemic-enforced restrictions on travel and social spending as well as the stimulus payments made by the federal government. Real balances are likely to have fallen much more sharply since then as most of the remaining travel restrictions have been lifted while inflation has surged.
The proportion of households saying they are better off financially than a year before dropped to 37% in May from 42% in May 2021, while the proportion saying they are worse off leapt to 46% from 22%. Reflecting the impact of inflation, the consumer sentiment index fell to a record low in June , worse than during the financial crisis in 2008 , the recession in 1980 or the aftermath of the oil shock in 1975 .
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