Consumers around the world are sitting on $2.9 trillion U.S. in savings that they amassed during the global pandemic, according to new research from Bloomberg Economics.
The massive cash pile is expected to unleash a powerful recovery from the pandemic-induced recession. Households in the U.S., China, United Kingdom, Japan and the biggest euro-area nations socked money away when forced by the coronavirus to stay home and avoid travel, dining in at restaurants and in-person shopping.
Half the total amount in savings — $1.5 trillion U.S. — is in the U.S. alone, the Bloomberg data shows. That’s equivalent to the annual gross domestic product (GDP) of South Korea. Such savings should provide fuel for economies to rebound once COVID-19 is finally under control as vaccines are rolled out.
The optimists are betting on a shopping spree as people return to retailers, restaurants, entertainment venues, tourist hot spots and sports events as well as buy big-ticket items such as vehicles and appliances.
In the U.S., a running down of all the money saved in the past year would propel economic growth to as much as 9% rather than the 4.6% currently projected for 2021 GDP, according to Bloomberg Economics.
The U.S. is not alone in enjoying a cushion of cash savings. Chinese households poured $430 billion U.S. more into their bank accounts than they might have done normally. Similar deposits rose $300 billion U.S. in Japan and $160 billion U.S. in the U.K.
In Canada, Canadian Imperial Bank of Commerce (TSX:CM) has estimated that Canadians are sitting on $100 billion of cash that they have saved over the past year during the pandemic.
