Edward Conard

Top Ten New York Times Bestselling Author

  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
Upside of Inequality Oxford Unintended Consequences

AI Summary. The authors construct measures of excess household savings accumulated during the COVID-19 pandemic and find they have been unwound in the United States, declined in advanced foreign economies, and slowed in emerging market economies. Past recessions featured smaller increases in excess savings and greater persistence in the accumulated stock.

Francois de Soyres, Dylan Moore and Julio Ortiz Federal Reserve Board
Date Posted:

.@FSoyres @FedResearch estimates that excess savings have come down much faster in the United States than in other advanced economies.

Have households spent down the excess savings built up during the pandemic?

Core argument: Excess savings accumulated during the COVID-19 pandemic were unprecedented in size but have been unwound in the United States, declined in advanced foreign economies, and slowed in emerging market economies, according to the authors' constructed measure.

Household savings rates spiked across several countries following the onset of the COVID-19 pandemic. We construct a measure of excess savings for the United States, advanced foreign economies, and emerging market economies, and compare the COVID-19 recession to past recessionary episodes. While accumulated excess savings during COVID-19 were unprecedented in size, they have been unwound in the United States, declined in the advanced foreign economies, and slowed in the emerging market economies. Relative to COVID-19, past episodes are characterized by smaller increases in excess savings and greater persistence in the stock of excess savings. Absent any further shocks to disposable income or savings behavior, our analysis suggests that the accumulated average AFE excess savings should be unwound by the end of the year.

Takeaways by Macro Roundup® AI

  1. Excess savings accumulated during the COVID-19 pandemic were unprecedented in size but have been unwound in the United States, declined in advanced foreign economies, and slowed in emerging market economies, according to the authors' constructed measure.
  2. Past recessionary episodes featured smaller increases in excess savings and greater persistence in the stock of excess savings than the COVID-19 recession.
  3. The authors' analysis suggests accumulated average advanced-foreign-economy excess savings should be unwound by the end of the year, absent further shocks to disposable income or savings behavior.

Related Articles:

  • The Rise and Fall of Pandemic Excess Savings — Researchers estimate US households accumulated about $2.1tn in excess savings above the pre-pandemic trend before drawing them down, with cumulative drawdowns of $1.6tn leaving roughly $500bn remaining. If recent drawdown rates persist, the authors project remaining excess savings would continue supporting household spending for several more months.
  • America’s “Excess” Household Savings Are Going Away — Americans drew down more than $1tn of "excess" savings accumulated since the pandemic began, eliminating over half the surplus, and at that pace the entire stock would be exhausted within a year. The drawdown is attributed to weak dividend and interest income, as companies favored buybacks, and to large capital gains tax bills owed by wealthy households.
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