Global consumers have been doing well at saving during this past year of the pandemic, with a total of $5.4 trillion now stockpiled, Financial Times (FT) writes.
Recently, consumers are becoming more confident about the economic outlook. This could come with a strong recovery in spending as businesses get ready to move past COVID.
The excess $5.4 trillion was accumulated by households by the end of the first quarter this year. They saved that much according to comparisons with the 2019 spending pattern, and equaling around 6 percent of the global gross domestic product, estimates by Moody’s say.
With the boost in global consumer confidence, shoppers are likely to start spending again in shops, bars and other such places as they begin reopening and restrictions to control COVID-19 are loosened.
The first quarter of this year saw the Conference Board global consumer confidence index hitting its highest rates since 2005, with the entire world seeing new surges in interest.
If consumers spend around a third of their excess savings, it would help to spur the global output by around 2 percentage points both this year and next.
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Household incomes have mostly withstood the storm in terms of the huge fall in output for the global economy, and have done so through the protection offered from unusually large government stimulus programs. And customers had largely reduced their spending last year in order to stave off the uncertainty and also to cope with the numerous businesses closed due to shutdowns.
Americans began receiving their third stimulus check packages, for $1,400 each, in March, and have contributed to the economy with less spending on usually profitable areas like travel and dining out and heavy spending on things like the “stay-at-home” economy, with areas such as eCommerce and grocery delivery reaping the benefits.
