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.”