Whilst we are still reeling from the havoc that the pandemic has wrecked on the global economy, Ben Carlson joins the growing list of economic commentators anticipating a consumption boom when the dust settles. As Ben shows in this article examples of new areas of spending even during the pandemic when uncertainty over the economy and personal income and wealth are still reasons to worry, human beings’ natural desire to spend and consume remains a key driver. More importantly, he brings up data – thanks to The CARES act which left meaningful amounts of money in the hands of the consumer as a stimulus package, data shows that household savings are at an all time high and not only provides plenty of cushion to households in these uncertain times but also a latent growth driver as and when the pandemic ends.
“It’s amazing to think how quickly our consumption habits shifted from travel, dining out and experiences to stuff in such a short time.
RV sales are booming. People are remodeling their houses like crazy. Pool installations are happening at a breakneck pace. Bikes are impossible to find in many places.  Appliances are on backorder. It took me weeks to find a trampoline and months to find barbells for a home gym.
And while people have still been spending more than most would have imagined during a pandemic, many consumers have also repaired their balance sheets.”
He quotes Tim Guy:
“These are annualized numbers, though, so the actual total is $931 billion. That alone is a big cushion. How big? Suppose we spread the stock of excess savings out over 12 months. That provides households an additional $77.6 billon of monthly spending power, equivalent to 10.3% of the June wages and salaries. That’s real money.
But wait, there’s more. Consumer credit dropped roughly $100 billion from its peak, leaving room for households to borrow their way into additional spending if needed – or even if just desired.
Those two items alone total more than $1 trillion. Where is the money sitting? Total checkable deposits in the economy have surged by about $1.3 trillion dollars.”
“…The CARES Act may go down as one of the most successful government programs in history. Not only did it help stave off a depression, but it provided many consumers with a cushion for the first time in a while.
If this thing drags on and we don’t get another fiscal stimulus bill, it’s possible people may have to begin depleting these savings.
But once we enter a post-pandemic world there’s a good chance most of this excess savings will find its way into the economy in a hurry.
People are going to want to travel again. Disney’s theme parks will be packed. Restaurants and bars will be filled. People will be spending money on stuff they’ve been cutting back on for months. If we can make it through this, however long it ends up taking, I think we could see a relief spending boom.”

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