Deutsche Bank AG analyst Olga Cotaga reckons that because people can’t recoup missed spending on services once a lockdown ends, that means they don’t consume enough to make a dent in their savings.
“We just get one haircut—we don’t get the amount of haircuts we missed during lockdown,” she said in a Sept. 21 podcast. “That pent-up demand that’s the backlog of all the decisions that you postponed during lockdown isn’t really there.”
Consumer preferences have also changed for good, according to an ECB paper that found many people realized during 2020 that they just didn’t miss certain things.
Some savings depletion is still helping to sustain the economic rebound, according to Karen Ward, chief market strategist in EMEA at JPMorgan Asset Management.
“The tail winds for demand are pretty strong,” she told Bloomberg Television. “I don’t think what we’ve seen so far is going to derail the recovery.”
Even so, shortages of goods amid a global supply squeeze mean that sometimes where there’s demand, money can’t be spent.
In suburban Minneapolis, financial adviser Mike Leverty says his affluent clients want to dip into savings to buy new cars or swimming pools, but can’t because of shortages of goods or labor.
“A client wants to do a kitchen remodel, but the contractors are booked for a year,” he said.
Finally, the vast pile of money also hasn’t accrued to all socio-economic groups equally. Seniors and the already wealthy have experienced the biggest gains—but they are often the least likely to spend.
“My sense is that much of that savings has accrued to upper middle income and upper income households,” said Mark Vitner, an economist at Wells Fargo & Co. “I think there’s still plenty of fuel in the tank.”
—With assistance from Reade Pickert, Alex Tanzi, Deirdre Hipwell, Maeva Cousin (Economist), Andrew Atkinson, Alix Steel, Guy Johnson and Andrew Husby (Economist).
This article was provided by Bloomberg News.