SAN FRANCISCO—During Q1 2020, consumers deposited nearly $1.1 trillion in their bank and credit union savings accounts instead of using it for personal consumption, according to the latest quarterly report from the Federal Deposit Insurance Corporation.
The shift of $1.1 trillion from spending to savings pushed Gross Domestic Product (GDP) down 5%.
“Since personal consumption expenditures (PCE) makes up about 70% of GDP, the U.S. economy will remain stuck as long as consumers keep their spending money in the bank,” said Dan Geller, the developer of the Theory of Money Anxiety and the President of Analyticom.
The $1.1 trillion consumers shifted to savings in the first three months of this year is five times greater than the amount of money consumers saved during an average quarter in 2019.
The Act of Hoarding
“This money represents disposable income consumers decided to save rather than spend, and does not include any of the government funds distributed to consumers and businesses though the Coronavirus Aid, Relief, and Economic Security (CARES) Act approved by Congress in late March, 2020,” stated Geller.
The $1.1 trillion consumers deposited in their liquid (checking, savings and money market) bank accounts represents "mattress money," which is the act of hoarding, said Geller.