A quick read of the news about statistics on such questions as consumer attitudes, savings rates, and behavior during and after previous economic shocks suggest that the more things change, the more they seem to stay the same.
Economic forecasters are generally projecting a rubber band effect on spending, with the economy now poised to snap back with a vengeance. That surge would be fueled in large part by a household savings rate that, currently at more than 20% of after-tax income, the highest since World War II.
A Federal Reserve report for the third quarter of last year found that American households had $2.9 trillion more in cash and cash equivalents than just before the pandemic struck. That figure doesn’t include the recent stimulus payments.
What have people been spending their money on? Shelter. Real estate was already enjoying a bull market when the pandemic struck. Then untold thousands of city dwellers locked their condos and apartments and bought country homes because the internet allowed them to work from anywhere. Total existing-home sales rose to 5.64 million in 2020, up 5.6 percent from 2019 during calendar 2020, and U.S. existing-home sales rose 22.2% from December 2019, according to the National Association of Realtors.
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