If behavioral economists and psychologists wanted to conduct an experiment into consumer savings and spending patterns under extreme constraints, the last three months provided a convenient laboratory. Deprived of many of their most familiar spending activities, Americans got a chance to think long and hard about the various priorities in their lives.

April’s 33% savings rate may be a statistical anomaly subject to revisions. However, professional observers like PGIM Fixed Income’s chief global economist Nathan Sheets expect the rate to remain in the double digits for the remainder of 2020. Other economists think that savings will remain at elevated levels for several years.

Time and money, in that order, are often clients’ most precious resources. As the nation gradually emerges from lockdown, advisors are counseling anxious clients, some of whom have seen their lives upended and others who are considering major changes in their lifestyles, to use the experience as one of reflection.

In March and April, Americans had long hours to revisit the alignment between their desired and actual lifestyles. Where they want to live and work, how they invest and who they want to spend the rest of their lives with are all on the table.

“It’s been a great way for clients to learn how little it takes to get by, even without running the numbers,” says Lisa Brown, chief strategy officer of Brightworth in Atlanta. “When they saw how much money was left in the bank, it was eye-opening.”

Different clients faced disparate issues. Corporate executives wondered if a comfortable retirement was suddenly in jeopardy, while some small business owners worried about survival, according to Brown.

Changing Careers And Lifestyles
One of her clients had talked for several years about leaving corporate America and taking a serious pay cut to join a non-profit. After simulating the two options on a Monte Carlo program, Brown told him that the net result of switching careers meant the chances of his portfolio surviving into his 90s fell from 98% to 96%.

Small business owners, who provide 49% of all private-sector employment, should be so lucky. Many companies in the retail and hospitality sectors have been deemed non-essential. Some won’t reopen. Consumers have been forced to purchase necessities at Amazon, Walmart, Costco, Target and other retail giants.

Justified or not, the government-mandated shutdown of many small businesses that were viable in the pre-pandemic world could translate into the most massive transfer of wealth in modern history from Mom and Pop businesses to much larger companies. Sadly, several advisors report helping clients liquidate their firms and, in some cases, referring them to bankruptcy attorneys.

Resentment over the lockdown is likely to outlive the virus. The finger of blame will be pointed in many directions.

Consumers over 60 years old are likely to be especially cautious about going out and spending until there is a vaccine or a potent anti-viral drug. “The tendency is to blame government for shutting down the economy but, in many cases, private individuals shut down the economy themselves,” says David Kelly, chief global strategist at J.P. Morgan Asset Management. “A large chunk of the population is genuinely scared of this disease.”

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