With the trajectory of the U.S. economy uncertain, Americans saved a record portion of their monthly income in April.
The savings rate for that month hit an all-time high of 33.5 percent, according to USA Today, citing Commerce Department data. In the months after, that rate fell, but the June rate of 19.5 percent remained nearly triple the normal rate. The average monthly rate of savings was 7.5 percent of income before the pandemic began.
“We’ve never had this much savings,” Tom Porcelli, chief economist of RBC Capital Markets, told the newspaper. “It’s uncharted territory.”
An analysis by Moody’s Analytics indicated that from March through June, American households saved an additional $916 billion compared to pre-pandemic levels. While June is the latest month with available figures, the number will almost certainly surpass $1 trillion once July is added, according to USA Today.
Consumer spending also rose during the same period, including a record increase of 8.5 percent in May. However, during the same period nearly every household received a stimulus check and numerous outlets for spending, including travel, dining out and movie theaters were largely or wholly unavailable.
However, the bulk of the savings applied to middle-income workers who have retained their jobs during the pandemic, according to USA Today. Low-wage workers in the service, retail and hospitality industries saved less than 5 percent in the first quarter, while higher-income households banked closer to 15 percent in the first quarter. People who both kept their jobs and did not make too much to qualify for the stimulus checks were particularly well-positioned to save.
“People are saving because they don’t know what the future holds,” Moody’s chief economist, Mark Zandi, told the newspaper. “They’re likely to be concerned that their job is safe.”
He added that people will likely continue spending at a comparable rate until “the coast is clear and the pandemic is over” — that is, once a vaccine is widely available.