Pardon the likely bad question, but where did the “excess savings“ go? The money was originally stimulus money created and given to people.
So as it is reduced as “excess” it must either end up at government or corporations, right? (as opposed to other citizens, which would show as savings rate, which is declining)
That glut of stimulus money (purchasing power) helped increase prices. So... isn’t the remaining “excess” remaining simply more inflation coming ahead?
Isn’t this why the “savings rate” is important, as it is showing us how much Americans can keep when adjusted for those higher prices, while the “excess savings” shows us how much upward price pressure remains?
Hi Robert, well "savings" is really the net of two things, the Disposable Personal Income (whether it's earned or from gov't transfers (welfare/social security/etc)) and Personal Outlays (Personal Consumption Expenditures for goods and services) (and to a lesser extent interest and other personal transfer payments). To your question of what has this Disposable Personal Income been spent on that'll be the two charts above (i.e., the PCE Goods and Services). Early in and coming out of the pandemic it was goods. Hence the share of goods that took our dollars skyrocketed. Now it'll be services because as you can see, though it's recovered slightly it's still below historical %. As that goes up, then so does wage pressures since services (leisure, dining, massages, hair salons, etc.) are mostly human labor oriented. So we're expecting some pressures there. Hope that helps!
...... yet
After seeing what followed Volcker's fight with inflation, expecting a soft landing is obnoxious.
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Remarkable!
Pardon the likely bad question, but where did the “excess savings“ go? The money was originally stimulus money created and given to people.
So as it is reduced as “excess” it must either end up at government or corporations, right? (as opposed to other citizens, which would show as savings rate, which is declining)
That glut of stimulus money (purchasing power) helped increase prices. So... isn’t the remaining “excess” remaining simply more inflation coming ahead?
Isn’t this why the “savings rate” is important, as it is showing us how much Americans can keep when adjusted for those higher prices, while the “excess savings” shows us how much upward price pressure remains?
Thank you for your insight!
Hi Robert, well "savings" is really the net of two things, the Disposable Personal Income (whether it's earned or from gov't transfers (welfare/social security/etc)) and Personal Outlays (Personal Consumption Expenditures for goods and services) (and to a lesser extent interest and other personal transfer payments). To your question of what has this Disposable Personal Income been spent on that'll be the two charts above (i.e., the PCE Goods and Services). Early in and coming out of the pandemic it was goods. Hence the share of goods that took our dollars skyrocketed. Now it'll be services because as you can see, though it's recovered slightly it's still below historical %. As that goes up, then so does wage pressures since services (leisure, dining, massages, hair salons, etc.) are mostly human labor oriented. So we're expecting some pressures there. Hope that helps!
There IS a recession for the RIF's going through high tech. Disagree .