It is estimated that the saved stimulus controls will help stimulate the economic recovery

Americans saved $ 1.4 trillion in the first three quarters of 2020, or about twice as much as in the same period last year, according to the Berenberg Economics analysis. This amount is equivalent to almost 10% of household spending in 2019, estimates Berenberg’s chief economist Holger Schmieding.

“In this unusual recession, governments have been unusually generous, people have failed to spend money and therefore have the money and the desire to spend,” Mr Schmieding said. Once business restrictions are lifted and people feel it is safe to go out again, “they will spend a lot – I guess the beaches will be crowded, the pubs will be crowded” and “by May and June it will be in full swing.” , he said.

President Biden calls for a new $ 1.9 trillion Covid-19 aid package to help Americans cope with the economic shock of the pandemic. His plan includes $ 1,400 per person in direct payments to most households and a supplement of $ 400 per week in unemployment insurance through September.

An analysis by the Federal Reserve Bank of New York found that consumers retained more than a third of the first stimulus checks, which were sent to households as part of the $ 2 trillion care law passed in March last year. Only less than a third of the stimulus payment, 29%, was spent, while 36% were saved and 35% used to pay off debts. The survey also found that consumers expected to spend an even smaller share of future incentive payments and use a higher share to pay off debts.

Marcus Prouty said he put his first $ 1,200 incentive in savings because he was “slightly terrified of what might happen” after losing his job as a cook in March. Mr. Prouty, a 25-year-old student in Boise, Idaho, spent the aid in the coming months. He has received unemployment benefits and hopes to find a new job this spring, when he expects businesses to start hiring again.

“I saved enough money from where I could buy the things I needed,” like a new laptop, “but most of my money goes to food and rent,” he said. He recently put his $ 600 savings into savings and – except for one unexpected emergency – hopes to spend it on a vacation in California once he receives a Covid-19 vaccine.

The economic downturn caused by the Covid-19 pandemic is different from a typical downturn that leaves consumers poor in funds and caring businesses to engage as demand slowly recovers. Job losses have been severe in some sectors, especially in service industries such as bars and restaurants. But once vaccines are distributed more widely and the demand for services becomes higher, economists expect employers in high-turnover sectors, such as bars and restaurants, to get hired quickly.

Demand for services such as haircuts, movie tickets, hotel stays and elective medical procedures has been affected by the pandemic, and spending on services remains below pre-pandemic levels. With non-essential businesses closed or operating at limited capacity in many regions, consumers have not been able to spend their money as freely as before – and many have saved them in return.

The personal savings rate, the share of after-tax income that US consumers purchase, was 12.9% in November, according to the Commerce Department. This compares with a saving rate of 7.5% in November 2019, before the pandemic hit.

James Sweeney, chief economist at Credit Suisse, says the economic outlook for 2021 has risen sharply after Congress approved a second round of stimulus payments in late December. “The US household sector appears to be in good financial shape,” he said.

Economists expect spending to push up inflation a little higher this year, but said Federal Reserve officials would not worry about it after years of weak price pressures.

Gregory Daco, chief economist at Oxford Economics in the United States, said the Federation “would welcome even more signs that increased activity is leading to moderate inflationary pressures in line with or above” its 2% inflation target.

Low-income households are more likely to spend their checks immediately. Consumers with less than $ 100 in their bank accounts spent more than 40 percent of incentive payments in the first month, while people with more than $ 4,000 in their accounts barely spent a penny, according to a recent study published by the Bureau. National Economic Research.

Saving was not an option for 65-year-old Wendy Hartigan of Philadelphia, who described government aid as “the only thing stopping me from being on the street.” She lost her job at a day care unit when it was closed in March. She began collecting unemployment benefits then and received her first $ 1,200 incentive payment. Her $ 600 check came in early January.

“It’s hard, it’s not enough, it goes into my account and it comes out the next day, I couldn’t save anything,” said Ms. Hartigan, who used checks for bills, food and to pay for the room in the residential hotel where lives now.

Ms. Hartigan has an event planning business focused primarily on weddings, but the pandemic has shut down much of the industry. Two weddings he was planning last year have been postponed.

“This year is still up in the air, the bride is still afraid,” she said. “I’m very stuck, I’m stuck between a rock and a hard place.”

Write to Harriet Torry at [email protected]