Excess Savings: It Was Nice While it Lasted

But guess who's still winning?

With the cost of living through the roof, the savings rate has plummeted from it’s Covid high. It seems like a lifetime ago people were stashing away 30%+ of their earnings.

Currently, the savings rate is half the pre-Covid average. This is unsurprising, as the cost of life’s essentials has soared - food, rent, debt servicing. Consequently, in dollar terms, whatever excess savings was accumulated during Covid is nearly gone. And at this rate of decline, the consumer will soon be worse off than they were pre-Covid.

It’s as if some diabolical master is fucking with us. “You thought you were flush with cash? Psych! Not anymore!”.

The aggregate numbers don’t tell the full story. You know who didn’t get the rug pulled out from under them? The top quintile of income earners. While the bottom 80% have less cash than they did pre-Covid, the top 20% is still sitting on a hefty cushion.