FAST FIVE: Soaring Debt Payments Wiping Out Savings Ensures Peak Hawkishness Has Passed

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The pandemic rise in excess savings was probably the most rapid increase in wealth ever seen.

These excess savings act as a buffer to a recession as they dampen the feedback loop of a decline in spending, leading to a fall in income, which means less spending, and so on.

The BEA (Bureau of Economic Analysis) defines the flow of savings = disposable personal income – consumption – other outlays.

The personal savings rate is the difference between disposable income and consumption as a percentage of disposable income.

Savings are being increasingly stressed by rising debt repayments.

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