What you're looking at is monthly personal saving, not the stock of total savings. So $1,151B represents the amount saved in March 2022 (at a seasonally adjusted annual rate), not the total amount of savings that consumers have.
Is there any connection to the surge in housing demand? It’s been attributed to lower interest rates but I wonder if savings impacted it as well. Would high income savers be likely to target housing?
Savers are definitely targeting housing, but a lot of that has manifested as home improvements throughout the pandemic. I think the main impact on home prices would be "overpayment". Homebuyers are not perfectly rational and tend to prefer specific properties for personal reasons unrelated to their value as investments, and as a result often overpay for properties (compared to, say, what a savvy investor would offer). When homes are difficult to come by (like right now) this overpayment can get worse. The other factor would be a higher ability for certain segments of the population to make a large down payment, which is often a major roadblock to purchasing a home post-2008 (although this is likely spurring more homebuilding, not necessarily boosting home prices). I plan on talking more about the housing market in detail soon!
Why do you think the Census Bureau’s SIPP survey and Fed’s own SCF survey show radically different (factor of 2!) household wealth, assets, etc from the Z1 data?
SIPP data on net worth historically has problems properly accounting for the assets of people in the top end of the wealth distribution and nowadays simply excludes the top 1% from some of their net worth estimates. Considering the large percent of assets that are held by people at the top of the wealth distribution, this leads them to drastically underestimate household net worth. Here's a good piece from SSA on the issue: https://www.ssa.gov/policy/docs/ssb/v65n1/v65n1p63.html
I'm not seeing a big divergence from SCF and Z1, so I am not quite sure what you're looking at. But I would keep in mind that some institutions that aren't usually considered households (like hedge funds) are sometimes lumped in with households by the Federal Reserve.
"the Federal Reserve offsets increased public sector borrowing by raising interest rates to curb private sector borrowing" .... is that going to work this time around with savings rates so high? Crushing private borrowing to offset public borrowing seems like an even more blunt instrument than usual.
Personal savings (FRED data) is right back where it started, implying that this $2.5 trillion is fictitious. Where is the disconnect??
https://fred.stlouisfed.org/series/PMSAVE
Hi Doug,
What you're looking at is monthly personal saving, not the stock of total savings. So $1,151B represents the amount saved in March 2022 (at a seasonally adjusted annual rate), not the total amount of savings that consumers have.
Is there any connection to the surge in housing demand? It’s been attributed to lower interest rates but I wonder if savings impacted it as well. Would high income savers be likely to target housing?
Savers are definitely targeting housing, but a lot of that has manifested as home improvements throughout the pandemic. I think the main impact on home prices would be "overpayment". Homebuyers are not perfectly rational and tend to prefer specific properties for personal reasons unrelated to their value as investments, and as a result often overpay for properties (compared to, say, what a savvy investor would offer). When homes are difficult to come by (like right now) this overpayment can get worse. The other factor would be a higher ability for certain segments of the population to make a large down payment, which is often a major roadblock to purchasing a home post-2008 (although this is likely spurring more homebuilding, not necessarily boosting home prices). I plan on talking more about the housing market in detail soon!
Hmm, interesting article. How do you think this has impacted the investing landscape?
Why do you think the Census Bureau’s SIPP survey and Fed’s own SCF survey show radically different (factor of 2!) household wealth, assets, etc from the Z1 data?
Hi Greg,
SIPP data on net worth historically has problems properly accounting for the assets of people in the top end of the wealth distribution and nowadays simply excludes the top 1% from some of their net worth estimates. Considering the large percent of assets that are held by people at the top of the wealth distribution, this leads them to drastically underestimate household net worth. Here's a good piece from SSA on the issue: https://www.ssa.gov/policy/docs/ssb/v65n1/v65n1p63.html
I'm not seeing a big divergence from SCF and Z1, so I am not quite sure what you're looking at. But I would keep in mind that some institutions that aren't usually considered households (like hedge funds) are sometimes lumped in with households by the Federal Reserve.
"the Federal Reserve offsets increased public sector borrowing by raising interest rates to curb private sector borrowing" .... is that going to work this time around with savings rates so high? Crushing private borrowing to offset public borrowing seems like an even more blunt instrument than usual.