In the November survey, only 5 percent of respondents said they plan on spending most of these savings in 2021 and 2022. Another 14 percent plan on spending some. Based on these responses and evidence from other surveys, we assumed in our January projection that households would not dip into these savings.
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.