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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.

The front-runners for Biden's Supreme Court pick

Judge Kentaji Brown Jackson (left) and Justice Leondra Kruger (right) Tom Williams-Pool/Getty Images and Lonnie Tague, US Department of Justice

Two highly accomplished Black female judges — Ketanji Brown Jackson, a judge on the D.C. Circuit Court of Appeals; and Leondra Kruger, a justice on the California Supreme Court — are seen as the early front-runners to replace retiring Supreme Court Justice Stephen Breyer.

The big picture: Jackson is a powerful federal judge with a record that progressives feel they can trust. Kruger was a highly regarded litigator and has carved out a reputation for working well with conservative judges.

Fed: Rate hikes are near

The Federal Reserve's headquarters building. Photo: Anna Moneymaker/Getty Images

The Federal Reserve is on track to raise its main target interest rate in mid-March, as Chair Jerome Powell pledged to be "humble and nimble" in adapting policy to a fast-changing economy.

Why it matters: Fed leaders are looking to choke off inflation by raising interest rates in the near future, but keeping its options open for how fast and far the effort will go.