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With up to three stimulus checks and fewer places to spend money during the pandemic, many in the U.S. have been saving more. The personal saving rate was still well above pre-pandemic levels in April 2021 at 14.9 percent, down from 33.7 percent in April 2020, according to CBS Detroit.
Bank of America CEO Brian Moynihan recently estimated that customers have not spent 65-to-70 percent of their last two stimulus checks and many households are sitting on a lot more money than they had in early 2020.
Consumer spending this year has surged to the tune of $1 trillion-plus as the economy reopens, much of it fueled by leftover stimulus money, said Moynihan, who runs the second-biggest U.S. bank. That’s 20 percent more spending than 2019, he said on CBS’s “Face the Nation.”
People are shifting money from stores to sit-down restaurants and spending more on domestic travel, car rentals and hotels for leisure trips, he said.
The U.S. economy is projected to grow 7 percent in 2021 and 5.5 percent in 2022, according to Bank of America’s research team, Bloomberg reported.
Companies have unused credit lines, Moynihan said. The banking industry has been challenged because many consumers and businesses are sitting on cash from savings and stimulus during the pandemic and not borrowing money.
The pandemic has shed more light on growing disparities in the broader economy, CBS Local reported. Many households did well financially during covid, but many others fell far behind where they were in early 2020. Unemployment is still higher than pre-pandemic levels, and millions of jobs have not come back.
An eviction moratorium from the Centers for Disease Control and Prevention is scheduled to expire at the end of June and 7 million people are still behind on their rent, according to the Census Bureau.
Some Twitter users seemed skeptical of the picture Moynihan’s message was painting.
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“Meanwhile back in reality ville massive %s of these so called $avers owe 100s of bil in back rent (avg 5400.00 & nearly 7 mos in mortgage arrears). When surveyed these non payrs specifically said they were saving instead of paying.
Owe vs saved ratio is 12:1,” NYDOUGH tweeted.
“So what your saying is they need to spend about 30-40% more so they can keep those debt bubbles inflating,” @LorenHodl tweeted.
As of late May, more than 25 percent of U.S. adults (61 million people) reported some difficulty keeping up with expenses in the prior week. A survey from the Federal Reserve Bank of New York determined that 58 percent-plus of people receiving a third stimulus check have or will use the money to pay down debt or buy things.
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