The total net worth of US households in the final quarter of last year was $122.9trn, says Justin Lahart in The Wall Street Journal. The figure had climbed from $111.4trn a year before. That’s unusual for a recession: after 2008 US household wealth fell and “then took years to recover”. The gains have been driven by rising stockmarkets and property prices, but Americans also have more cash on hand: $2.8trn, a 21% annual increase.
Households across 21 rich countries saved about $6trn during the first nine months of last year, says The Economist. That is roughly double what they would probably have put aside absent Covid-19, generating “excess savings” of $3trn. The rise in global savings does not follow the same pattern everywhere. In the UK and the eurozone it has been driven by lower expenditure owing to closed restaurants and more modest holidays. In Japan and the US, by contrast, it represents a rise in household income thanks to government stimulus cheques.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
In the UK, households have put aside £160bn in excess savings during the pandemic, or 12% of GDP, says Sanjay Raja in a Deutsche Bank note. Credit-card debt is also down by nearly 20% over the past year. These gains have been captured mostly by middle- and higher-income earners, with lower income groups reporting taking on more debt. Around 5%-10% of that savings pile is set to be spent over the coming quarters, delivering a “0.5% to 1% boost to GDP”. The impetus from excess savings will be “the driving force behind” the UK recovery this year.
-
What is the 25x retirement rule and does it work?The 25x retirement rule has been around for decades but many experts question if it is a suitable strategy
-
When is the self-assessment tax return deadline?If you are self-employed, rent out a property or earn income from savings or investments, you may need to complete a self-assessment tax return. We run through the deadlines you need to know about
-
The financial crisis in UK universities – what can be done?UK universities are running out of cash and have begun to shed staff; bankruptcies look likely. What’s gone wrong, and what should be done about it?
-
'Governments are launching an assault on the independence of central banks'Opinion Say goodbye to the era of central bank orthodoxy and hello to the new era of central bank dependency, says Jeremy McKeown
-
Why investors can no longer trust traditional statistical indicatorsOpinion The statistical indicators and data investors have relied on for decades are no longer fit for purpose. It's time to move on, says Helen Thomas
-
The most likely outcome of the AI boom is a big fallOpinion Like the dotcom boom of the late 1990s, AI is not paying off – despite huge investments being made in the hope of creating AI-based wealth
-
The rise of Robin Zeng: China’s billionaire battery kingRobin Zeng, a pioneer in EV batteries, is vying with Li Ka-shing for the title of Hong Kong’s richest person. He is typical of a new kind of tycoon in China
-
How retail investors can gain exposure to Lloyd’s of LondonIt’s hard for retail investors to get in on the action at Lloyd’s of London. Here are some of the ways to gain exposure
-
The goal of business is not profit, but virtueOpinion Serve your customers well, and the profits will follow, according to a new book. It rarely works the other way around, says Stuart Watkins
-
Earnings estimates are a rigged game – especially in the USThe number of US stocks beating earnings estimates tells us only that guidance has deliberately been set too low
