Discussion Topic:

What are the impacts of a rising savings on the U.S. pandemic-hit economy?

The U.S. has been traditionally known as a relatively low saving country, compared to countries like Japan. The U.S. personal saving rate had seldom gone into the double digits since the early 1990s (Source: the Federal Reserve Bank of St. Louis).

In response to the coronavirus pandemic, people inevitably try to save more. We observe that the U.S. savings are rising in an unprecedented manner: the U.S. personal savings rate (personal saving as a percentage of disposable personal income) hit a historic 33% in April 2020.Although the savings rate has since retraced some of this rise, it remained at 13.6 percentin the fourth quarter of 2020, far higher than the pre-pandemic level of roughly 8%.