Going, Going… Americans Set to Run Out of ‘Excess Savings’ by Q3

SAN FRANCISCO–Americans are exhausting their pandemic savings – and could run out of funds by the end of the third quarter, according to a new study from the Federal Reserve Bank of San Francisco. 

The Federal Reserve-SF defined “excess savings” as the difference between actual savings and the pre-recession trend.  

As of June, the Fed bank estimates show U.S. households held less than $190 billion of aggregate excess savings. 

"There is considerable uncertainty in the outlook, but we estimate that these excess savings are likely to be depleted during the third quarter of 2023," San Francisco Fed researchers Hamza Abdelrahman and Luiz Oliveira said in a blog post.

‘Beyond Their Means’

According to the two researchers, government data showed consumers were spending beyond their means during the last quarter of 2022 and first quarter of 2023.

"The Bureau of Economic Analysis recently revised its previous estimates to show household disposable income was lower and personal consumption was higher than previously reported for the fourth quarter of 2022 and first quarter of 2023," Abdelrahman and Oliveira said. 

Revised Numbers

They added that the combined revisions brought down the Bureau's measure of aggregate personal savings by more than $50 billion.

As CUToday.info has reported, consumer spending has remained robust and has helped to head off or delay forecasts for a recession. But as CUToday.info has also reported, Americans’ credit card debt has now topped $1 trillion.