A Penny Saved
The Personal Savings Rate (PSR) in the United States has skyrocketed. I am having a difficulty finding information on the factors which have caused the savings rate to jump with ongoing mass unemployment. Is this an effect of the stimulus checks? Or perhaps all Americans are panicked and hoarding cash, particularly those who have held on to their jobs.
The Economist published an article claiming the US PSR Is Too Damned High two weeks before the entire world economy collapsed. The title of the infographic poses the question “are the squirrels nuts?” The text claims the increased savings rate may be fueled in part by stricter lending policies making it more “difficult for middle-income households to spend beyond their means,” as well as “the on- and off-again trade war may be another source of anxiety.” The article contains not a single word about Wuhan, COVID-19, factory and manufacturing shutdowns, or the enormous impact the virus was having at the time. The article does, however, consider that “despite a strong economy, households remain deeply uncertain about the future,” but chalked that uncertainty up to “the threat to their jobs from automation and import competition.” Laughable.
A Business Insider piece from early May attributes some of the savings to decreased spending “due to social distancing measures related to the coronavirus pandemic.” Anecdotally, as far as my family’s spending habits have been concerned, that was true in April. Our savings for the month was significantly higher than normal due to decreased spending on child care, restaurants, gas, and fun (throw in fear-based saving to boot). Sometime in late May, when the flour and toilet paper began returning to shelves, it became clear that the world would not descend into a COVID-19 induced anarchic pandemonium. For us, that meant a return to our regular spending habits plus some overcompensating. Without summer daycare or a scheduled vacation, we’ve “invested” in sporting goods, musical instruments, lessons, and other entertainment items. I have taken up a new hobby (backpacking/hunting/fishing) which requires significant investments. We are participating in more and more activities outside of the house and our gas spend has increased to nearly a tank of gas a week; up from a single tank for all of April. Our grocery and dining expenses have increased significantly with socially distant activities with friends, such as picnicking and [insert excuse to drink near-ish other people here]. Our giving and charitable donations are at an all-time high, as they should be.
Thus far, our June spending is out of control. It is the 9th of the month and I am amazed at the mental acrobatics we perform when defending our frivolity. If retail therapy is real, Kate and I are partaking in high-end, celebrity-style inpatient rehab. On the one hand, if this is what will get us through this time together, sobeit. My fear is that we are acting like airplane passengers failing to put on their own masks before helping others. Or behaving like the proverbial ostrich; completely in denial of the world around us. My natural tendency in times of stress and uncertainty is to batten down the hatches and hoard. So, why does that Amazon delivery feel so damned good? Cardboard is one hell of a drug.
