Americans did not save as much as we had thought prior to the pandemic. The amount of money Americans saved early on in the pandemic is even more impressive.
The Commerce Department released on Thursday, alongside its latest estimate for the second quarter gross domestic product (GDP), benchmark revisions of the data that it uses in many of its reports. One change was that the estimates of how much income people held onto before the pandemic were lowered. Savings as a percentage of income after tax for the four years that ended in the fourth quarter 2019 were 7.7% on average before Thursday. The average savings rate for that time period has been calculated to be 6.2%.
This complicates the calculations that economists use to determine how much "excess" savings are on households' balance sheets. That is, the amount of savings above what people would have expected to have had the Covid crisis not occurred. This is a general approach that looks at the amount of money saved every month or quarter prior to the pandemic. Then, you draw a line to show the trend, and compare it to how much has been saved since the pandemic. Savings rose early in the pandemic as a combination between government assistance and reduced spending filled up bank accounts. As the government support was gradually removed and the economy slowly reopened up, people began to save less.