Instead, we expected that their savings rate would decline from a peak of 27.5 percent in the second quarter of 2020 to below 4 percent by the end of 2023, as the need for precautionary savings faded. However, a positive surprise to spending is possible, especially if the virus is brought under control and household confidence improves.
Let’s now consider the potential impact of households drawing down on their savings for consumption. Macroeconomic consequences of a savings drawdown for consumption We can start by thinking about how much would be spent on goods and services and over what time horizon.