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Data: Bureau of Economic Analysis; Chart: Axios Visuals

Americans with limited options to spend during the pandemic saved more than usual. And while it’s unclear how this money will be spent, everyone agrees this is awesome for the economy.

Why it matters: Wells Fargo estimates $2.4 trillion in excess savings has been accumulated by consumers since the beginning of the pandemic. And consumer spending accounts for about 68% of GDP.

What they’re saying: "The savings are enormous," Wells Fargo’s Tim Quinlan tells Axios.

  • "This is equivalent to 15-20% of typical annual consumption and is an ample amount of dry powder consumers are able to tap as the economy re-opens," he adds.
  • How these savings will be deployed is "unpredictable," but they'll likely have a big impact on consumer spending "over the next couple years," Pantheon Macro’s Shepherdson said in a research note.

Yes, but: Quinlan notes that excess savings estimates don’t account for how much was used for things like paying off student loans, paying down a mortgage, or financing a brokerage account.

  • Commonwealth Financial Network’s Anu Gaggar tells Axios, "Lower income households could quickly run down their savings once additional stimulus payments are halted and rent and mortgage payment moratoriums are lifted."
  • "On the other hand, savings of higher income households could be stickier as they have lower marginal propensities to consume," she said.

But, but, but: "They still put households on better financial footing and therefore can support spending growth," Quinlan added.

  • Similarly, Shepherdson estimates that if households spent just 15% of these savings over the next two years, it would provide a 0.8% boost to GDP per year.

The big picture: The economy faces all sorts of shortages as growth heats up, which is boosting inflation. But the fact that consumers are still piling up savings speaks to how much demand continues to eclipse supply.

Go deeper

Sep 17, 2021 - Health

Retail sales increase despite low expectations from Delta

Data: FRED; Chart: Axios Visuals

Consumers defied expectations and shopped at an increasing rate amid a resurgence in COVID-19 cases.

Why it matters: Several measures of consumer confidence fell sharply in August, suggesting consumer spending could fall during the month. In fact, concerns about the Delta variant's impact on the economy had prominent Wall Street economists cutting their expectations for Q3 GDP growth.

2 mins ago - World

Social Democrats' win in Germany could shake up Europe

Olaf Scholz caught the bouquet on Sunday. Photo: Florian Gaertner/Photothek via Getty

BERLIN Angela Merkel's political farewell was spoiled Sunday night when the Social Democrats (SPD) narrowly claimed victory in Germany's elections, just four years after suffering their worst loss since World War II.

Why it matters: The stunning political comeback could swing the balance of power in Germany leftward after 16 years of rule by Merkel's conservative bloc, and it could lay the groundwork for a more ambitious European Union.

42 mins ago - Politics & Policy

Senate Republicans sink short-term government funding, debt limit bill

Senate Minority Leader Mitch McConnell. Photo: Drew Angerer/Getty Images

Senate Republicans on Monday voted down the House-passed bill to fund the government through Dec. 3 and raise the debt limit.

Why it matters: Congress is just 72 hours away from a potential shutdown, so now comes Democrats' Plan B. Democratic leadership is expected strip the short-term funding bill of language about raising the debt limit — the part that Republicans' reject — in order to pass a bill before federal agencies close down on Friday.