COVID has driven Americans to bank $1.6 TRILLION in savings

[Hydrogen]

The COVID-19 pandemic has driven Americans to hoard $1.6 trillion in 'excess savings' amidst ongoing fears of an economic crisis, despite the fact that experts are warning that the value of these rainy day funds are being slashed by surging inflation rates.

American households would not have put away the huge sum had the COVID-19 crisis not changed the world over the last two years, according to the Federal Reserve Bank of New York.

The funds are far more than the usual three to six months of emergency savings financial advisors typically recommend.

Saving rates have dipped to 2019 levels following four consecutive quarters of record high amounts of savings due to Americans hoarding their savings, money managers, financial advisers and economists say, according to the Wall Street Journal.

But they forsee more cash stockpiling in the immediate future, with the Omicron variant likely to trigger Americans to save yet more of their cash over fears of possible future chaos.  

To make matters worse, annual inflation rates in the United States have steadily increased since January 2021 and through August 2021, starting at just 1.4 percent in January 2021 all the way to 5 percent in August 2021. It has since surged to 6.1 per cent in October, the most recent figure available, and the highest level since 1990.



This chart shows the percentage of disposable income saved by Americans each month - with the rate spiking close to 35 per cent as COVID hit US shores  



The blue line on this chart from the Bureau of Economic Analysis shows the amount of cash Americans saved - in billions of dollars each month, with a COVID spike in 2020. The red line on the right shows the amount economists think Americans would have saved had it not been for the appearance of the virus  

'I have been one of the more optimistic ones, but with this new variant now on the horizon, I think we're in for more of the same of what we've seen over the last six months,' says Wendy Edelberg, director of the Hamilton Project at the Brookings Institution.

In reality, economists say hoarding one's savings can actually hurt a persons' long-term finances if inflation continues to increase, while causing bigger issues for the economy, of which consumer spending accounts for over two-thirds of its gross domestic product, the Wall Street Journal reports.

America's money hoarding began at the start of the coronavirus pandemic, as the government issued three rounds of stimulus checks to qualified individuals.

As the pandemic nears it's second year, and with no end in sign as the specter of the Omicron variant continues to loom large, Americans, many of whom have been largely housebound since the pandemic's onset, have remained thriftier than ever.

The result has been the highest personal savings rate since World War II thanks in part to rising incomes and a healthy labor market, according to the Journal.

'We see a lot of folks sitting on an incredibly high savings amount, and it's really just a fear factor,' says Nina O’Neal, partner and investment adviser with AIM Advisors.

'In 2021, they kind of felt like, "Things were getting better. We're going to get better from the pandemic," and they did, but also, they didn't. It is sort of like the same sideways winding road from last year, and so I think people started to spend a little bit more but they continue to hold that cash.'

However, there has been a slight uptick in spending in recent months as experts say Americans have started to use more credit cards to spend their money on smaller items, with 27 percent of US consumers saying in October they had applied for a credit card over the last 12 months.

And while credit card balances have remained below pre-pandemic levels, the amount increased $17 billion to $800 billion in the third quarter of 2021, with the same sized increase in the second quarter, according to the Federal Reserve Bank of New York.

Americans between the ages of 40 to 49 and 50 to 59 currently make up the lions share of the credit card debt.

And consumer spending on bigger purchases spiked 2.2 percent in October.  

Charlotte Geletka, managing partner and owner at the financial advisory firm Silver Penny Financial Planning, outlined the disadvantages of hoarding savings, as money in the bank only loses value.

Geletka added that on the other hand, cash affords people flexibility and is easier to access in the event of a personal financial crisis.  

Geletka told the Journal that she recommends her clients to split their funds by putting one portion of their savings in the stock market, while keeping the other liquid, as in cash, for easy access should an emergency arise.

Meanwhile, President Joe Biden recently said reversing rampant inflation is a 'top priority' after cost of living increased to 6.2 percent - its highest level in 31 years.

Last month, Biden announced that Jerome Powell will serve a second term as the Federal Reserve Chair.

https://www.dailymail.co.uk/news/article-10269475/COVID-19-turned-Americans-super-savers-hoard-cash-despite-inflation-threatening-value.html

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We appear to lack complete savings data for 2021. Charts above indicate massive $1.6 trillion in savings for 2020 followed by a dip.

The author of the piece says "everything recovered in 2021" with consumers having no need to emergency binge save anymore.

Wouldn't it be so much better if consumers bought up inflation protected assets, rather than placing their savings in low interest rate accounts for that period. Bitcoin's value grew dramatically in 2021. Could a portion of that growth be attributed to consumers and retail investors placing savings in bitcoin, gold or silver?

Curious to know if anyone feels the economy made a complete recovery in 2021. Are we back to normal?

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[pawanjain]

We appear to lack complete savings data for 2021. Charts above indicate massive $1.6 trillion in savings for 2020 followed by a dip.

The author of the piece says "everything recovered in 2021" with consumers having no need to emergency binge save anymore.

Wouldn't it be so much better if consumers bought up inflation protected assets, rather than placing their savings in low interest rate accounts for that period. Bitcoin's value grew dramatically in 2021. Could a portion of that growth be attributed to consumers and retail investors placing savings in bitcoin, gold or silver?

I think buying assets which beats inflation and also gives us profits is becoming the new norm these days.
People are becoming more aware these days and are investing into various assets.
There are less number of people these days who would prefer to stack their savings in bank accounts.
Even the fixed deposits are hardly near 5% - 6% which shows how inflation is overtaking savings account interest rates.

Curious to know if anyone feels the economy made a complete recovery in 2021. Are we back to normal?

Of course not. We are definitely not back to normal and I think we will never be.
The simple reason is because the government has rained a lot of money into the economy.
This is creating an inflationary effect and will probably will not be ever recovered.

[Lucius]

Wouldn't it be so much better if consumers bought up inflation protected assets, rather than placing their savings in low interest rate accounts for that period.

The average person anywhere in the world still believes that fiat is the best option, because in Europe, too, people's savings in banks are increasing. I’m not from a country that is doing well financially, but savings in banks are steadily increasing thanks to hundreds of thousands of people working abroad and sending money home. At a time when we are scared of viruses and when we read every day about supply chain interruptions, most people think that it is better to have fiat on hand in case we need it, than any other asset regardless of inflation.

Bitcoin's value grew dramatically in 2021. Could a portion of that growth be attributed to consumers and retail investors placing savings in bitcoin, gold or silver?

Volatility is what scares potential investors, even though the price is a little less than $20k higher than a year ago - but the opinion that the bull run is over and that a new crypto winter is coming does not create an optimistic environment for risky investments.

Curious to know if anyone feels the economy made a complete recovery in 2021. Are we back to normal?

I don't believe we can talk about normalization in any sense if a pandemic is constantly hanging over our heads, and when I hear how much world politicians scare people with each new strain of the virus I wonder if they want normalization or want to continue to deprive people of their rights and freedoms. Take a new dose of vaccine and everything will be OK, until you need a new dose and so on indefinitely...

[kryptqnick]

Putting in savings more than 6 months worth of emergency funds, what a first-world problem. Clearly, the US managed quite okay during the pandemic if the population could afford to put more into savings during the pandemic than they did before. Honestly, I don't get it. If they fear a huge crisis, shouldn't they be hoarding something of actual value, such as essential medications and food? What's the point of having tons of money at a time when there's a lack of products and when money loses value quickly?
Also, if inflation doesn't motivate people to spend fiat under some circumstances, the whole argument that Bitcoin can't work as money because it's deflationary and people won't be motivated to spend it fall apart.
As for the current state of the economy, I think we're in recession, but somehow entering it gradually rather than crashing into it.

[Husires]

When stocks were at their lowest value, many people bought food, drink, and rushed to buy toilet paper.
Then, the problems of dismissal of workers appeared, so many of them saved, and because the knowledge of many people about investment is shallow, most of them will keep the money in the form of cash due to the ease of its liquidation, and some may buy, gold, real estate or stocks.
1.6 trillion is a huge sum, so many people may think again if inflation levels continue to increase.


Cryptocurrencies are still far from an option for most people, or at least they will be a timid investment.

[Fortify]

We appear to lack complete savings data for 2021. Charts above indicate massive $1.6 trillion in savings for 2020 followed by a dip.

The author of the piece says "everything recovered in 2021" with consumers having no need to emergency binge save anymore.

Wouldn't it be so much better if consumers bought up inflation protected assets, rather than placing their savings in low interest rate accounts for that period. Bitcoin's value grew dramatically in 2021. Could a portion of that growth be attributed to consumers and retail investors placing savings in bitcoin, gold or silver?

Curious to know if anyone feels the economy made a complete recovery in 2021. Are we back to normal?

It's actually a good thing and long may it continue into the future. Modern society in most of the USA and North America pushes consumer debt far too hard, allowing people to borrow all sorts of things on credit. Saving for a "rainy day" is often looked down on and investing has never been more accessible yet is not pursued by many. Having backup funds can offer great peace in your life instead of spending every cent you get. The general reason for this massive savings glut is fear of job losses but also because many big ticket items have been put off - either because the products are unavailable (like high end electronics consoles due to chip shortages) or people buying new cars as factories were shut down right after Covid. It might be a few years before people start spending again but hopefully some of this savings culture continues longer term as it is a good trait to hold.

[Gozie51]

Curious to know if anyone feels the economy made a complete recovery in 2021. Are we back to normal?

Just when the world was trying to do a recovery from the covid-19 pandemic, a particular variant which is known as the delta variant appeared and did a little more panic that chased people back into their shell and that caused the already recovery economy back and afterwards the omicron is sweeping the world now. Therefore, I don't thnk the economy did a recovery in 2021 (a year after covid-19 year) , except we are going to watch 2022 outcome.

[jrrsparkles]

Wouldn't it be so much better if consumers bought up inflation protected assets, rather than placing their savings in low interest rate accounts for that period. Bitcoin's value grew dramatically in 2021. Could a portion of that growth be attributed to consumers and retail investors placing savings in bitcoin, gold or silver?

If people had such kind of awareness they should thrown away their fiat and want the gold or barter system back as the medium of exchange but they never acknowledges their money is losing its value and I don't know how many people understand what is inflation in this world no matter wither its a developed or developing nation.

[Yaunfitda]

Wouldn't it be so much better if consumers bought up inflation protected assets, rather than placing their savings in low interest rate accounts for that period. Bitcoin's value grew dramatically in 2021. Could a portion of that growth be attributed to consumers and retail investors placing savings in bitcoin, gold or silver?

If people had such kind of awareness they should thrown away their fiat and want the gold or barter system back as the medium of exchange but they never acknowledges their money is losing its value and I don't know how many people understand what is inflation in this world no matter wither its a developed or developing nation.

If that is the case then are we also getting closer to the adoption, or just that bitcoin becoming a hedge to economic and financial woes we've experience since the covid-19 hit us. And maybe yeah, it could be part of the savings have been in bitcoin and then majority of them withdrawing during the peak at around $60k'ish that's why the sudden downturn specially that it happen close to the holidays, (thanks giving, christmas and new year). As for the economy recovering, I doubt that it can recover what we have lost though, it might take years for an ordinary business to recoup what they've lost and some of them even closes their business already.

[yhiaali3]

I don't think we are back to normal and I don't think we will soon, we need a lot of time for the economy to fully recover, don't forget that we are talking about the United States of America, which has the strongest economy in the world, if this is the case in the United States what do you think Will it be in the rest of the world? The economy in most countries of the world is like a building based on paper foundations, with any strong wind tremor that will fall (what happened when the mutated Corona virus appeared, gives us a clear indication).
Of course, it would be much better if consumers turned to inflation-protected assets like Bitcoin, but unfortunately so far, the mass adoption of Bitcoin has been weak despite the fact that it has achieved massive growth in the recent period.

[so98nn]

True point that they could have saved their money into something much more profitable. For example, dipped shared with guaranteed up surge for the NIFTY or Fortune 500 companies and her highest returns by the end of this year or may be first quarter of 2022 as the market recovers from dips.

However, its the crisis situation that’s why everyone saved it in the most secure place which savings account in a bank. Fine, you get 4-5% interest in it but it’s safe money and it’s being saved for the crisis situation and it’s not investment money. 

May be that is the reason why it all got stuck in savings bank account.

[dothebeats]

Perhaps their reasoning was they don't need any profits, they just need to save their money just to weather the COVID-19 panic and ride out the storm. And once they saw that it isn't so bad after all, they began to pull out their assets before banks can even begin to make use of those savings. But I do agree, they could have gone for other options for their money instead of just keeping it on the banks. Since most people didn't really have a job back then, keeping your assets in bitcoin—which performed dramatically well in 2021—would have been the best option. But it isn't for everybody, I guess.

[Darker45]

I'm not so sure with the US, but I can say that things around here have not yet gone back to normal, or perhaps they won't anymore and what's happening right now is what they call as the new normal.

Saving in cash is not really sound. Perhaps the recommended 3-6 months emergency savings is enough. The rest should be saved in more or less inflation-resistant assets. What those are, it depends.

Anyway, it is interesting to note that despite the economic effect of the pandemic, Americans still manage to hoard a huge amount excess savings, even reaching $1.6 trillion. Down here, the pandemic has exhausted what little savings ordinary people have kept for a long time.

[cafucafucafu]

Certainly another savings glut.

Which is why it makes no sense to hold fiat assets right now in my opinion, there are simply too much liquidity sloshing around everywhere and interest rates are just so low.

Do expect a reversal of this trend in 2022 though as people get out and about, and spending. But that would increase inflationary pressures.

[Gyfts]

So technically these sort of savings would cause a deflationary period, because money isn't circulating in the economy anymore. But then the US government chooses to begin printing an undetermined amount of money (at the time), paying people to stay home and issuing out business loans with no hope of them ever being paid back due to Covid restrictions. It sure is easy to save when you hand out money like candy.

[naira]

I'm not so sure with the US, but I can say that things around here have not yet gone back to normal, or perhaps they won't anymore and what's happening right now is what they call as the new normal.

As a country that prints money freely, I am struck by America's ethic to do this to avoid inflation. isn't this too late to do, but well then never. Saving money and halting circulation broadly allows for a slight increase in deflation. The existence of Covid 19 has brought many economic changes of all kinds, returning as if the crisis had befallen for thousands of years. In fact, we are seeing this being done a lot in other countries. Renewed money management makes America more frugal than it used to be.

[o_e_l_e_o]

Saving money is smart, despite what the people who have a vested interest in you going in to debt will tell you. Saving it in fiat, however, is dumb. Sure, bitcoin may be volatile, but at least it can go up as well as down, as opposed to fiat which just constantly and steadily devalues.

Clearly, the US managed quite okay during the pandemic if the population could afford to put more into savings during the pandemic than they did before.

Anyway, it is interesting to note that despite the economic effect of the pandemic, Americans still manage to hoard a huge amount excess savings, even reaching $1.6 trillion.

I wouldn't generalize this to all Americans. The ones who were already doing fine have been spending less on eating out, traveling, vacations, etc., and are saving it all instead. The ones who were already struggling are struggling even more. Despite all this increased saving, average household debt in the US is continuing to hit record highs each month.

Modern society in most of the USA and North America pushes consumer debt far too hard

That's because our entire society and indeed economy is built upon debt. Can you imagine how many businesses would fold almost overnight if everyone just stopped buying shit they don't need?

It sure is easy to save when you hand out money like candy.

I'm sure there will be absolutely no long term repercussions from this mass money printing!

[pinggoki]

Smart move actually, they have been to recessions and housing crisis before so they know that if shit hits the fan, they know better to have money protected in inflation. Although I don't like the idea of storing money in banks, I just think that they could've done a better job like at the least putting it in a index fund or stock market.

[Sithara007]

These numbers are not what they seems to be. First of all, if you want to compare the personal savings, then you should compare with the M1 monetary supply on the other side. Right now, it stands at $20 trillion. The figure was less than $4 trillion two years ago. As you can see, the M1 supply has increased by more than 400%, and the personal savings hasn't grown anywhere near that rate. Using inflation rate for comparison can be misleading, because inflation will be gradual and won't be felt in ground for 5-10 years after the excess monetary supply is created.

[magneto]

There was just so much liquidity being pumped out by central banks all across the world.

They try to make it seem like that it is an issue of people not spending enough in the economy, but the real reason for this current savings debacle is very simple - record low interest rates, quantitative easing, and tons and tons of repos.

Inflation is coming soon, guys. Stay clear of fiat based assets.

[GeorgeJohn]

Although I don't like the idea of storing money in banks, I just think that they could've done a better job like at the least putting it in a index fund or stock market.

From my perspective storing money in the bank is not encouraging from the angle of my understanding, because it doesn't going to yield anything tangible in the bank, so therefore i embrace the ideology of investment of decentralized currency which is Bitcoin and other digital currencies per say, that's is my personal opinion.

[o_e_l_e_o]

I just think that they could've done a better job like at the least putting it in a index fund or stock market.

Pretty much. Even if you know nothing about the stock market and you don't want to spend time researching, just sticking your money in some global or all world index is far better than leaving it rotting in a bank. Even during the stock market crash at the start of COVID, it only took 6 months to recover to previous levels, and is up another 20% or so since then. Meanwhile the same money in a bank is getting maybe 1% interest while being hit with 5% inflation. You should only be holding in fiat your emergency fund - anything else is a waste.

but the real reason for this current savings debacle is very simple - record low interest rates, quantitative easing, and tons and tons of repos.

All the more reason not to keep money in fiat savings. Pay down your debts, pay into your IRA/match your employer's retirement contributions, buy bitcoin, buy stocks, anything but leaving your money as fiat and getting hammered by inflation.

[Haunebu]

Firstly, Americans != The rest of the world. Secondly, everything is definitely not back to normal. Far from it actually. New deadlier variants of COVID have ensured that in the past couple of years.

More and more better vaccines are being developed to fight all variants of COVID by different companies globally.

However, the silver lining here is that the pandemic is slowly and steadily converting into an endemic which is great news though it will still take a lot more time for everything to go back to normal.

[DrBeer]

Having a financial cushion is a useful and, moreover, necessary thing. In my "theory" - it should be an amount that would allow in any situation, I did not take into account the fantastic and extreme, there the calculation becomes not entirely adequate, the family must live for at least three years. Rent an apartment, buy groceries and essential goods, in a word, keep yourself in acceptable conditions. now part of such a pillow has been converted to cryptocurrency, which somehow symbolizes the support of trends

[davis196]

Wouldn't it be so much better if consumers bought up inflation protected assets, rather than placing their savings in low interest rate accounts for that period. Bitcoin's value grew dramatically in 2021. Could a portion of that growth be attributed to consumers and retail investors placing savings in bitcoin, gold or silver?

The people,who are putting money aside "for a rainy day" most likely wouldn't choose a volatile asset like Bitcoin.
I also doubt that they would buy gold,because they need assets,which can offer the best liquidity and lowest risk.Gold has very low risk,but not the best financial liquidity.When you urgently need cash,you'll have to sell your gold as fast as possible.
Keeping cash and having money in the bank are the most obvious choices,when it comes to having the best liquidity and lowest risk.Those people would prefer losing part of their savings due to the inflation,rather than investing in long term financial assets,which can bring decent profit above the inflation rate.
We have to bear in mind that people aren't always rational,when it comes to financial decisions.
 

[dezoel]

I won’t really say that things are back to normal, but things has gotten better than it was during the covid19 time. During the covid19 the price for a lot of things increased and everywhere seems to be quite locked up as sources of income for a lot of people were blocked off due to them losing their jobs. A lot of activities are back to normal and incomes are being generated, so the economy is better now.

As for people choosing to save their money instead of investment, that goes to show that a lot of people hardly knows anything about investment, because they lack the knowledge of investment. This is true, because the average person around you knows nothing about investment, and only does savings. You’d hardly see anyone who is an investor.

[Wayan_Pedjeng]

If people are still keeping their assets in fiat, despite the fact that the federal reserve is printing banknotes like crazy, then they are purely delusional. In my country, the rates for bank deposits have now slipped below the inflation rate. And although stock markets gave good returns for 2021, I don't expect the situation to remain the same for the next few years. One important factor that is keeping retail inflation in check is that crude oil prices are staying below $80 per barrel. If this level is breached, then we'll be in trouble.

[paxmao]

What is worrying is not as much what they actually have in the bank, but rather what they are going to take out of the bank to invest in real state and durable items. It is impossible that this level of irresponsible money printing (it was needed during the first stages of COVID, now is just ridiculous) does not drive a real state bubble a super inflation and a crazy market for the future. This is just not the right way to go.

[fiulpro]

I don't understand how would it work ?
At the end of the day people are saving nothing but fiat and at the same time, the government is lacking the whole system connected with the economy, therefore as long as the money is in the bank they can use it as they please and therefore it's better to hold those savings in other currencies like bitcoins, but then again it's volatile thus scares people Incase something bad happens, I am pretty sure there are many people buying gold as their savings as well, especially in countries like India. But I do think they are doing it the wrong way if they are holding it in banks. Banks don't have economic security right now.

[DrBeer]

If people are still keeping their assets in fiat, despite the fact that the federal reserve is printing banknotes like crazy, then they are purely delusional. In my country, the rates for bank deposits have now slipped below the inflation rate. And although stock markets gave good returns for 2021, I don't expect the situation to remain the same for the next few years. One important factor that is keeping retail inflation in check is that crude oil prices are staying below $80 per barrel. If this level is breached, then we'll be in trouble.

Do you know this word - diversification?
So - a financial pillow is not a bundle of dollars. This is, for example, a "basket consisting" of a bundle of dollars a bundle of euros, several (as you understand not very large) bars of gold / platinum, it can be jewelry (although I don't really like this option), now cryptocurrency has also been added. Although it can be real estate bought in a stable country, the rent of which will give you passive income. In this case, the fall of one as a rule does not lead to the fall of other assets, which means that in total you lose the minimum. Just be smart about building your portfolio.

[jaberwock]

Do you know this word - diversification?
So - a financial pillow is not a bundle of dollars. This is, for example, a "basket consisting" of a bundle of dollars a bundle of euros, several (as you understand not very large) bars of gold / platinum, it can be jewelry (although I don't really like this option), now cryptocurrency has also been added. Although it can be real estate bought in a stable country, the rent of which will give you passive income. In this case, the fall of one as a rule does not lead to the fall of other assets, which means that in total you lose the minimum. Just be smart about building your portfolio.

Diversification is very important, as long as you’re doing right. Sometimes it can be a nightmare, because I have seen people who end up diversifying their assets wrongly and at the end of the day when they check their portfolio they will notice that almost everything, if not all, that they have invested in is on loss. Can be really bad if you don’t know what you’re doing and end up not making the right choice.

But if you do it right, you’re going to be the one who would benefit a lot from it. People who do proper research before selecting assets to diversify with usually make high success rate, like 90%. And the good thing about diversification is that one those coins might have a really huge return on your investment than you expected.

[barbara44]

Most of the people would always go for savings, because that is simply what they know. I don’t think anyone is being taught to start up investing immediately, it’s only few people that  feels the need to invest their money. And in a period like that you would definitely be seeing only few people who would be investing money, and those people are the ones who understand that they are meant to be buying assets when the market is very low.

Others who are just average investors, are going to be afraid to even invest in a moment like that, because they would feel that that’s a wrong time for them to be investing their money in the market, because the market would be dropping and they would feel it’s a loss for them. If you check during that period, the price of so many assets dropped, including Bitcoin and other cryptocurrencies.

[hello_good_sir]

Almost all of the savings will quickly dissipate as spending within the economy in the next year.

I'm honestly not sure what Powell is thinking with QE, it's just not going to work alongside rampant inflation and probably will achieve the opposite effect given that markets generally tank whenever there are rumors that inflation will edge higher in the next quarter.

But this is precisely the reason why we need more than one central party in control of the money supply. $1.6 trillion is no joke and money supply keeps going up. Most of this just ends up in the pockets of the wealthy.

[DrBeer]

Do you know this word - diversification?
So - a financial pillow is not a bundle of dollars. This is, for example, a "basket consisting" of a bundle of dollars a bundle of euros, several (as you understand not very large) bars of gold / platinum, it can be jewelry (although I don't really like this option), now cryptocurrency has also been added. Although it can be real estate bought in a stable country, the rent of which will give you passive income. In this case, the fall of one as a rule does not lead to the fall of other assets, which means that in total you lose the minimum. Just be smart about building your portfolio.

Diversification is very important, as long as you’re doing right. Sometimes it can be a nightmare, because I have seen people who end up diversifying their assets wrongly and at the end of the day when they check their portfolio they will notice that almost everything, if not all, that they have invested in is on loss. Can be really bad if you don’t know what you’re doing and end up not making the right choice.

But if you do it right, you’re going to be the one who would benefit a lot from it. People who do proper research before selecting assets to diversify with usually make high success rate, like 90%. And the good thing about diversification is that one those coins might have a really huge return on your investment than you expected.

I agree that any action with finance/cryptocurrencies should be balanced and thoughtful. As we understand it, this is a market where there are no guarantees, where there is manipulativeness and speculation, where there is the possibility of manual control. Therefore, diversification should also be thought out. Diversification does not mean taking bitcoin, swapping most of it for a bunch of different alternative cryptocurrencies, and waiting for a profit. This means choosing the most promising cryptocurrencies, distributing existing assets into parts, and exchanging them for selected cryptocurrencies. And what is important is to constantly monitor the situation and adjust the portfolio of assets.

[oHnK]

but the real reason for this current savings debacle is very simple - record low interest rates, quantitative easing, and tons and tons of repos.

All the more reason not to keep money in fiat savings. Pay down your debts, pay into your IRA/match your employer's retirement contributions, buy bitcoin, buy stocks, anything but leaving your money as fiat and getting hammered by inflation.

The main impact of this pandemic issue is the inflation. However, the economic conditions due to the pandemic have not completely improved. The difficulty of getting a job with social restrictions imposed and the costs incurred for health are getting bigger, both borne by the state, companies and even individual communities have become issues that support the multiplier effect of the current economic system.

People's psychology to save and save in the form of fiat is an absolute mistake, how can you not? I live in a country with a pretty worrisome economic past, when the economic crisis hit and systemic, the value of fiat became worthless. I myself convinced myself to take out all my fiat savings and convert them into Crypto, Gold, and Property.

Fiat is available only for basic cash flow needs that cannot be replaced. If there are still people in our environment who survive by hoarding fiat money, they need to be educated about the worst impacts.

[laredo7mm]

Wouldn't it be so much better if consumers bought up inflation protected assets, rather than placing their savings in low interest rate accounts for that period. Bitcoin's value grew dramatically in 2021. Could a portion of that growth be attributed to consumers and retail investors placing savings in bitcoin, gold or silver?

Most Americans especially old-aged people still trust valuable metals like gold and silver. Around 6% of Americans can use crypto. Though this has been increasing day by day I think many people still fear any new crypto regulation for the American people. It's a hard choice for them to choose between two category assets like one with high-risk high rewards and another with low-risk low rewards. Not every people like to take too much risk as long as they have an alternative to choose.

Curious to know if anyone feels the economy made a complete recovery in 2021. Are we back to normal?

The economy has recovered a little bit in 2021 but the high inflation rate, a new variant of COVID-19, and inequality in income threaten to recover emerging economy for many developing countries around the world. New variants of COVID-19 still disrupting the world economy and it indicates that this will damage our economy for the long term. An outbreak of Omicron variants created more financial instability for developing countries and many of those countries still lack any hard policy to control and recover from this pandemic.

[dezoel]

There is nothing wrong with saving 1.6 trillion dollars in the banks, it is just silly to hold it as dollars. First of all, you may think that "how did people manage to save that much if they are poorer this year", well the number is under 5k per person, and we are talking about a lot of rich people saving billions of dollars just themselves hence why the number looks like a bit higher.

This doesn't mean everyone has AT LEAST 5k, it just means the average, so someone with 1 billion dollars in the bank could cover for 200k people all by himself, imagine how many people are out there with 1+ million savings and you will see that there are still millions with absolutely nothing to their name. However no matter where this money came from, you have to realize that we are talking about cash, and that just doesn't make sense, crypto is much better and 1.6 trillion into crypto would be just silly to imagine, like 1+ million per bitcoin levels.

[CaptainCrapper]

The COVID-19 pandemic has driven Americans to hoard $1.6 trillion in 'excess savings' amidst ongoing fears of an economic crisis, despite the fact that experts are warning that the value of these rainy day funds are being slashed by surging inflation rates.

American households would not have put away the huge sum had the COVID-19 crisis not changed the world over the last two years, according to the Federal Reserve Bank of New York.

The funds are far more than the usual three to six months of emergency savings financial advisors typically recommend.

Saving rates have dipped to 2019 levels following four consecutive quarters of record high amounts of savings due to Americans hoarding their savings, money managers, financial advisers and economists say, according to the Wall Street Journal.

But they forsee more cash stockpiling in the immediate future, with the Omicron variant likely to trigger Americans to save yet more of their cash over fears of possible future chaos.  

To make matters worse, annual inflation rates in the United States have steadily increased since January 2021 and through August 2021, starting at just 1.4 percent in January 2021 all the way to 5 percent in August 2021. It has since surged to 6.1 per cent in October, the most recent figure available, and the highest level since 1990.



This chart shows the percentage of disposable income saved by Americans each month - with the rate spiking close to 35 per cent as COVID hit US shores  



The blue line on this chart from the Bureau of Economic Analysis shows the amount of cash Americans saved - in billions of dollars each month, with a COVID spike in 2020. The red line on the right shows the amount economists think Americans would have saved had it not been for the appearance of the virus  

'I have been one of the more optimistic ones, but with this new variant now on the horizon, I think we're in for more of the same of what we've seen over the last six months,' says Wendy Edelberg, director of the Hamilton Project at the Brookings Institution.

In reality, economists say hoarding one's savings can actually hurt a persons' long-term finances if inflation continues to increase, while causing bigger issues for the economy, of which consumer spending accounts for over two-thirds of its gross domestic product, the Wall Street Journal reports.

America's money hoarding began at the start of the coronavirus pandemic, as the government issued three rounds of stimulus checks to qualified individuals.

As the pandemic nears it's second year, and with no end in sign as the specter of the Omicron variant continues to loom large, Americans, many of whom have been largely housebound since the pandemic's onset, have remained thriftier than ever.

The result has been the highest personal savings rate since World War II thanks in part to rising incomes and a healthy labor market, according to the Journal.

'We see a lot of folks sitting on an incredibly high savings amount, and it's really just a fear factor,' says Nina O’Neal, partner and investment adviser with AIM Advisors.

'In 2021, they kind of felt like, "Things were getting better. We're going to get better from the pandemic," and they did, but also, they didn't. It is sort of like the same sideways winding road from last year, and so I think people started to spend a little bit more but they continue to hold that cash.'

However, there has been a slight uptick in spending in recent months as experts say Americans have started to use more credit cards to spend their money on smaller items, with 27 percent of US consumers saying in October they had applied for a credit card over the last 12 months.

And while credit card balances have remained below pre-pandemic levels, the amount increased $17 billion to $800 billion in the third quarter of 2021, with the same sized increase in the second quarter, according to the Federal Reserve Bank of New York.

Americans between the ages of 40 to 49 and 50 to 59 currently make up the lions share of the credit card debt.

And consumer spending on bigger purchases spiked 2.2 percent in October.  

Charlotte Geletka, managing partner and owner at the financial advisory firm Silver Penny Financial Planning, outlined the disadvantages of hoarding savings, as money in the bank only loses value.

Geletka added that on the other hand, cash affords people flexibility and is easier to access in the event of a personal financial crisis.  

Geletka told the Journal that she recommends her clients to split their funds by putting one portion of their savings in the stock market, while keeping the other liquid, as in cash, for easy access should an emergency arise.

Meanwhile, President Joe Biden recently said reversing rampant inflation is a 'top priority' after cost of living increased to 6.2 percent - its highest level in 31 years.

Last month, Biden announced that Jerome Powell will serve a second term as the Federal Reserve Chair.

https://www.dailymail.co.uk/news/article-10269475/COVID-19-turned-Americans-super-savers-hoard-cash-despite-inflation-threatening-value.html

....


We appear to lack complete savings data for 2021. Charts above indicate massive $1.6 trillion in savings for 2020 followed by a dip.

The author of the piece says "everything recovered in 2021" with consumers having no need to emergency binge save anymore.

Wouldn't it be so much better if consumers bought up inflation protected assets, rather than placing their savings in low interest rate accounts for that period. Bitcoin's value grew dramatically in 2021. Could a portion of that growth be attributed to consumers and retail investors placing savings in bitcoin, gold or silver?

Curious to know if anyone feels the economy made a complete recovery in 2021. Are we back to normal?

Oh my god, it a very good informative news so what we can expect is this news market is down for a pandemic bad sistuation. So After recovering market we can get a big something.

[usekevin]

There is nothing wrong with saving 1.6 trillion dollars in the banks, it is just silly to hold it as dollars. First of all, you may think that "how did people manage to save that much if they are poorer this year", well the number is under 5k per person, and we are talking about a lot of rich people saving billions of dollars just themselves hence why the number looks like a bit higher.

This doesn't mean everyone has AT LEAST 5k, it just means the average, so someone with 1 billion dollars in the bank could cover for 200k people all by himself, imagine how many people are out there with 1+ million savings and you will see that there are still millions with absolutely nothing to their name. However no matter where this money came from, you have to realize that we are talking about cash, and that just doesn't make sense, crypto is much better and 1.6 trillion into crypto would be just silly to imagine, like 1+ million per bitcoin levels.

Saving not only depending on the lockdown.It also depend on the people mindset.Only if the people think to save the money.They hold of the money, when they decided to sell at cost. No one can stop them.The people with less money on their hand will surely sell, when they face of medical expenses.The second category people are the rich one, who try to inverse at the dump market. It's to get double of profit from their dollars. Even if they sell at the less price to cash from crypto.