Households are running low on savings πŸ‘€

Households are running low on savings πŸ‘€

What happened β€” household savings continue to run dry, down to 8.2% of the GDP at the end of 2020, while total indebtedness (i.e. money borrowed) spiking to over 37% of the GDP, the highest it has been in recent years.

Why is this happening β€” obviously joblessness due to COVID as well as rising prices, emptying of safety nets to provide for healthcare expenses are primary reasons. Also, a spike in revenge spending after the first wave, intermittently emptying consumers’ pockets couldn’t be ruled out either. Wish the data was a bit more current though.

Going forward β€” alternative data points that are more current have continued to show a similarly undesirable picture. Several big banks and financial institutions have already sounded the horn of brewing bank loans and bankruptcies.

Big picture β€” these stats will be an overhang on investor mood as we slowly enter next quarterly earnings season.