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ASR in FT Unhedged: Are ‘excess savings’ real?

Ella Rathgeber

14th JUL. 2023

FT’s Rob Armstrong discusses whether the notion of ‘excess savings’ was a major error. The concept assumes that fiscal aid will be entirely spent by households to stimulate growth. “Dom White of Absolute Strategy Research argues that the whole concept is confused…”

Dom notes, “those deposits don’t get destroyed when they’re spent, as the excess savings concept implies — they merely get passed on to other consumers or businesses . . . you could say that ‘excess savings’ get converted into ‘excess income’. And, of course, while most of that excess income will subsequently get spent, a proportion will also get saved — so spending excess savings creates new savings. Either way you wish to frame it, the idea that those savings will become exhausted, and so spending will slow, is just plain wrong.”

  • To read the full article from Rob Armstrong on FT, please see HERE

  • ASR clients can read Dom’s original report: HERE

  • To receive a copy of this report as part of a free trial, kindly reply HERE

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