Americans will likely deplete the rest of the excess savings they accumulated during the pandemic this quarter, according to a new study from the Federal Reserve Bank of San Francisco.
After rapidly accumulating “unprecedented” levels of excess savings during the pandemic, the San Francisco Fed estimates American households held less than $190 billion in aggregate excess savings as of June. Excess savings peaked at $2.1 trillion in August 2021, far exceeding the projected trend line from before the pandemic.
However, American households began to pull from these excess savings more rapidly starting in 2022, averaging about $100 billion per month in drawdowns and totaling $1.9 trillion as of this June, according to the study.
If drawdowns continue at the same pace, excess savings will likely be depleted in the third quarter of 2023, which ends in September, the San Francisco Fed found.
