Personal Saving During the COVID-19 Recession

this one: The personal saving rate skyrocketed at the start of the COVID-19-induced recession. The personal saving rate is important for many reasons: Large changes in savings can have big effects on financial markets. Additionally, the personal saving rate might reflect individuals’ expectations about the duration of a recession. People are likely to save more when they expect an economic downturn to last for a long time—the “precautionary” motive for saving. If the downturn is not expected to last, people are likely to use their savings to maintain their consumption; that is, they will keep paying their rent, mortgage, utility bills, etc. Figure 1 shows the U.S. personal saving rate. Shaded areas indicate recessions dated by the National Bureau of Economic Research. The figure offers three points to focus on: First, with the notable exception of 2020, the saving rate changes slowly over time. It was stable in the 1960s and 1970s, declined from the late 1970s until the first half of the 2000s, and then increased again. From 1959 to 2019, the saving rate remained mostly within 4 or 5 percentage Personal Saving During the COVID-19 Recession