The Covid-19 pandemic will have prevented consumers from spending not only in France, but everywhere in the world. Moody’s therefore tried to calculate the cumulative excess savings, to understand what the effect of the recovery in consumption could be on the global recovery. And, unsurprisingly, the woolen stockings were puffed up like never before …
For want of spending, households have accumulated savings en masse
For France, as we know, the excess savings linked to the health crisis, called “Covid savings”, is estimated between 100 and 150 billion euros. A sum that the government hopes to succeed in quickly mobilizing to revive the hexagonal economy.
But that should be the hope of all governments around the world because the same situation has occurred, according to Moody’s, almost everywhere, mainly in North America and Europe. The two areas have been marked by long periods of confinement and health restrictions still in force … more numerous than in Asia, for example.
Shops and restaurants closed, cinemas and theaters with the curtains drawn… as households could not spend, they saved. Sums that Moody’s estimates at 5.400 billion dollars, nearly twice the French GDP…. And 6% of world GDP.
Americans count for half of this global Covid savings
Still according to Moody’s, it should be the United States that will benefit the most from the recovery driven by Covid savings … because it is impressive: 2.600 billion dollars saved by households in 2020, equivalent to 12% of GDP. In comparison, the 150 billion euros of savings of the French only weigh about 5% of the French GDP.
Nevertheless, consumers, according to Moody’s, should be careful: according to the agency, they will spend, in 2021, only a third of this Covid savings, or about 2,000 billion dollars worldwide.
The rich accumulate the majority of Covid savings
If spending won’t be there, explains Moody’s, it’s because of inequality: it’s the rich who have accumulated the most savings, and they should treat it as wealth rather than income, according to Mark Zandi, chief economist of the rating agency, and therefore not be inclined to spend it.
According to the agency, in the United States, it is essentially property owners who have accumulated the most Covid savings: 90% of the total. Households with higher education also hold 75%.