May
26

Strong Savings

While the personal savings rate has skyrocketed from 7.5% in 12/19 to 13.1% in 3/20, and wage growth has jumped from 3%/year in 12/19 to 7.9%/year in 4/20, the two are unrelated. Wages are up because many low wage workers have lost jobs. Savings rates have risen because spending has fallen faster than income. Savings rates should be elevated for some time as was the case following the Great Recession.

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