FAST FIVE: US Economy Set To Overheat As Households Are Flooded With $2 Trillion In Excess Savings

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Again, this is without factoring in a second stimulus package.

This is why the multiplier effects of the stimulus were unusually low.

Specifically, BofA estimates that the $0.9tn package alone will add another $200bn or so to excess saving.

The surge in savings will happen because, as Credit Suisse writes in a note on Friday, disposable “personal income will rise sharply in Q1 to just shy of its April peak after the $900bn relief bill (Figure 3).

It will also take some time to figure out how much of the $1.9tn package is going to pass (consensus appears to believe that the final number will be around $1.1 trillion).

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