If these “excess” savings are fully spent again as the pandemic ends, alongside US$1.9 trillion of new government spending and US$120bil per month Federal Reserve bond buying, it risks a sharp rise in inflation, according to economists such as former Treasury chief Larry Summers (pic) and former International Monetary Fund chief economist Olivier Blanchard.
WITH the second wave of the pandemic came the second lockdowns – and now evidence of the second household savings stash, too.
But even as expected spending of trillions of dollars of these “excess” savings stokes economic recovery forecasts, inflation fears and financial markets, some economists suspect large chunks of what look like precautionary buffers may outlive the pandemic itself – or least not find their way to the shops.
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