Expand chart
Data: U.S. Bureau of Economic Analysis; Chart: Axios Visuals

A major reason banks were rolling in so much dough last quarter is the explosive growth of the U.S. personal savings rate, which hit the highest mark since the 1980s in March and a historic 33% rate in April.

By the numbers: The rate of savings as a percentage of disposable income was by far the highest since the Bureau of Economic Analysis started tracking it in the 1960s.

  • The savings rate has jumped to almost double the previous record of 17.3% in May 1975.
  • Spending declined by a record 13.6% in April.

Yes, but: There is an aspect of “forced savings,” Diane Swonk, chief economist at Grant Thornton, told CNBC

  • “There’s not much opportunity for many people to go out and spend money," Megan Greene, a senior fellow at Harvard Kennedy School, told CNBC.
  • “With shops all closed and everybody locked up, the ‘shopportunities’ have dried up. That speaks to a kind of demand shock.”

Yes, but, but: Many economists have worried about the coronavirus pandemic leading to a more structural change in saving and spending habits leading to a permanently higher savings rate.

  • During the 1970s, the savings rate was consistently around 14%.

The big picture: The U.S. economy is much more dependent on consumer spending than it has been historically, and that is especially true now.

  • Businesses are looking to bounce back from losses suffered during government-imposed lockdowns to contain the COVID-19 outbreak and will need savings rates to fall back quickly and for consumers to return to previous spending patterns.

Go deeper

Felix Salmon, author of Capital
Aug 13, 2020 - Economy & Business

The statistics crisis

Illustration: Aïda Amer/Axios

If you don't know how broken something is, you're not going to be able to fix it.

  • That's the crisis facing policymakers trying to repair a devastated economy without knowing the true degree to which the pandemic has hurt the country.
Dan Primack, author of Pro Rata
59 mins ago - Economy & Business

GoodRx prices IPO at $33 per share, valued at $12.7 billion

Illustration: Sarah Grillo/Axios

GoodRx, a price comparison app for prescription drugs at local pharmacies, on Tuesday night raised $1.14 billion in its IPO, Axios has learned.

By the numbers: GoodRx priced its shares at $33 a piece, above its $24-$28 per share offering range, which will give it an initial market cap of around $12.7 billion.

Updated 1 hour ago - Politics & Policy

House Democrats and Trump admin strike deal to avert government shutdown

House Speaker Nancy Pelosi on Capitol Hill. Photo: Tom Williams/CQ-Roll Call via Getty Images

The House on Tuesday passed legislation to fund the government through Dec. 11, by a vote of 359-57.

Why it matters: The bill will avert a government shutdown when funding expires in eight days. Pelosi and House Majority Leader Steny Hoyer (D-Md.) said earlier that they hoped to hold a vote on the legislation on Tuesday evening.

Get Axios AM in your inbox

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Subscription failed
Thank you for subscribing!