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