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FEDS Note: Excess Savings during the COVID-19 Pandemic

Aditya Aladangady, David Cho, Laura Feiveson, and Eugenio Pinto

Over the pandemic, historic levels of government transfers boosted household income while household spending was severely curtailed by social distancing. This led the personal saving rate to soar (Figure 1), and we estimate that U.S. households accumulated about $2.3 trillion in savings in 2020 and through the summer of 2021, above and beyond what they would have saved if income and spending components had grown at recent, pre-pandemic trends.