The analysis of the distribution of excess savings across households combines their estimated allocation across assets, discussed above, with survey information on the composition of household portfolios along the net wealth distribution. Over the past three years the stock of excess savings was increasingly concentrated among wealthy households on both sides of the Atlantic. Other financial assets are calculated as a residual and mainly refer to stocks and bonds. Non-financial assets refer to gross capital formation. Liquid financial assets refer to currency and deposits. Notes: Each entry represents the cumulated value exceeding its trend estimated between 20. Sources: Eurostat, ECB, Federal Reserve Board and ECB calculations. (deviations from the pre-pandemic trend, percentages of trend disposable income) Īllocation of cumulated excess savings across assets Liquid financial assets amounted to 18.5% of trend disposable income, while illiquid assets fell below their pre-pandemic trend by 10.6%, also reflecting a sizeable accumulation of new loans. In the United States, the composition of cumulated excess savings at the end of 2022 was remarkably different. By contrast, cumulated excess savings in the (most) liquid financial assets, such as currency and deposits, peaked at 3.7% of trend disposable income in the first quarter of 2021 and then declined significantly to 0.6% in the fourth quarter of 2022. Taken together, these forms of cumulated excess savings rose steadily to reach 10.8% of trend disposable income in the fourth quarter of 2022 (Chart A). In the euro area, between the first quarter of 2020 and the fourth quarter of 2022, excess savings were invested in non-financial assets, such as housing, and in relatively illiquid financial assets, such as stocks and bonds, and were also used to pay back loans. Empirical evidence suggests that these partial and general equilibrium effects may play out differently in the euro area and the United States.īetween 20, in the euro area, excess savings were accumulated mostly in illiquid assets, while in the United States these were largely accumulated in liquid assets. Second, the impact of excess savings on the consumption impulse also depends on broader (general equilibrium) dynamics: on the one hand, the dynamic re-distribution of the savings spent by some households to other households prolongs the duration of the consumption impulse on the other hand, the anticipation by households of this future re-distribution dampens the size of the consumption impulse, as households smooth their consumption patterns over time. First, excess savings are allocated across assets with different degrees of liquidity, which is a first (partial equilibrium) determinant of their consumption impulse. īeyond the stock of pandemic savings, the composition of these excess savings matters for two reasons. to gauge the consumption impulse in the two jurisdictions. This box estimates the composition of excess savings and then calibrates a general equilibrium model with heterogenous agents based on the methodology used by Auclert et al. Besides the size of the stock, the composition of excess savings plays a key role in determining the implied consumption impulse. Moreover, it points to a larger remaining consumption impulse in the euro area relative to the United States, where consumption has expanded by considerably more in the post-pandemic period. Taken at face value, the large stock of excess savings in both economies suggests the possibility of a substantial consumption impulse, defined as the immediate stimulus to consumption from the potential use of these savings. In the United States, the accumulated stock of excess savings reached 13.2% in the third quarter of 2021, before declining to 7.9% in the fourth quarter of 2022. Between the first quarter of 2020 and the fourth quarter of 2022, the accumulated stock of excess savings rose steadily to reach 11.3% of trend (gross) disposable income in the euro area. Published as part of the ECB Economic Bulletin, Issue 4/2023.įollowing the outbreak of the pandemic, households in the euro area and the United States accumulated a large stock of savings, in excess of the pre-pandemic trend. Prepared by Niccolò Battistini, Virginia Di Nino and Johannes Gareis
0 kommentar(er)
