During the height of the pandemic, a national stimulus relief package put much-needed cash in the hands of millions of Americans. But nearly two years later, the question many economists are asking, is exactly how much money was shelled out? About $5 trillion.
According to a recent Bloomberg report, US Federal Reserve data shows that by the second quarter of this year, total cash-on-hand in American households sat at $4.7 trillion. Before the pandemic, in 2019 that number was $1 trillion held in accounts against which checks could be written. It’s been since something of this magnitude has happened, according to an analysis by the outlet. Bloomberg pointed out that current spending is akin to what took during WWII times.
This windfall of cash was likely caused by the $1.5 trillion in stimulus money allocated to Americans over the course of the last two years, which funded other money-making and sustaining ventures like significant investments, interest bearing savings and/or supplemental businesses.
The US Bureau of Economic Analysis found the US personal savings rate (disposable income minus outlays, divided by disposable income) was 17% in 2020, the highest annual rate since World War II which was 27.9%, was set in 1944.
What’s still yet to be explained is why this increase in cash flow continued to grow even after the last cycle of stimulus checks closed.
This increase in cash isn’t the case for every household, though. The bottom fifth of the income distribution experienced a 73% cash fall in the first half of 2022, according to Fed data, unlike every other tax-bracket group.