“Excess” Savings

I read an article the other day which stated, “Americans have socked away $1.5T in excess savings.” I have seen similar statements, and I get progressively more disturbed every time I read them.

First, what is “excess savings.” It isn’t like saving money is a bad idea. We could debate the sanity of various investments, but the idea of saving is not a negative. I would prefer if the line stated, “Americans have saved $1.5M more since COVID started than they did the previous year.”

The revised statement paints a more accurate picture but doesn’t carry with it the idea that all of us must go out and immediately spend this excess. After all, it isn’t like Americans need encouragement to spend money.

And the other piece that is missing from that quote is the who. Depending on what article you read, anywhere from 63 to 78% of American households are now living paycheck to paycheck since the start of the pandemic. So obviously, that extra $1.5T is not in their bank accounts, but in the hands of the wealthy.

I guess I hold out some vain hope that a pandemic side effect will be more responsibility with money. But of course, to do that people need to be making money again and, to some extent, that requires people to spend money. Unfortunately, the ultra-rich are not those people. Private flights to expensive places don’t create enough jobs.

The erosion of the middle class has long been a problem in America, and unfortunately the pandemic has only exacerbated the situation. Perhaps more of us will realize that since we never saved, lived within our means, or were responsible with debt, we weren’t in the middle class in the first place. And we certainly cannot return there unless we adopt those practices.

And thus, an appropriate action coming out of COVID is to adjust our savings to prepare for the next “rainy day.”

2 thoughts on ““Excess” Savings

  1. Following the US response to the pandemic as an outsider, it seemed pretty extraordinary that there had been barely any federal support until incredibly recently. It’s also unbelievable that the richest few billionaires have almost doubled their wealth during a pandemic, whilst the majority are suffering serious financial challenges

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  2. In terms of large scale programs, there were multiple acts passed at the start of the pandemic. Then round 2 was passed in December, and now this is round 3. The large gap between the first and second is the most glaring.

    I look at this as an example of “perfect” being the enemy of progress. There were issues with the first acts passed, and it provided a reason for a number of political figures to be hesitant on round 2. I am sure there will be flaws revealed with the recent deal from the Biden administration, but I have to believe the net effect is positive, and positive results combined with expediency will vastly outweigh any errors.

    In addition, it didn’t help that a number of people in power were content to let individuals gamble with their lives by favoring reopening over further relief for businesses. Of course, this is America: individualism, a desire for freedom, and a high risk tolerance is bred into most of our genetic codes. (For better or worse.)

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