For me and Roland, one of the best things about the pandemic is that we eat home-cooked meals everyday instead of going out to eat, as we had gotten into the habit of doing over the last couple of decades. I fast on Sundays but cook dinner every other day. One thing we didn't like about the pandemic restrictions at all, was the we couldn't go traveling at all, something we normally do a lot of. But both the no restaurants and no trips lifestyle saved us a lot of money. (I have now filled up my gas tank 3 times in the last 12 months!)
When I lived in Amsterdam, I learned how to cook and became a chef at a health food restaurant. But once I moved back to America in the late 70s, I gradually started eating out more and more. The pandemic changed everything. And let me tell you, eating homemade food is not just more delicious, it is also much healthier. And I lost 20 pounds... and that's with eating delicious desserts every single night.
Last March, when the pandemic was hitting home, I made some financial adjustments. I bought some gold and bitcoin as hedges against the market and I withdrew substantial cash from my bank... just in case. I didn't spend any of the cash and the gold and especially the bitcoin investments (speculation, really)-- things I always laughed at and avoided in the past-- have been astounding.
In his Working Life blog today, Jonathan Tasini noted in a post about the wealth tax proposal that "While over half a million people in the U.S. have died because of COVID in the year-long pandemic while millions of people have become sick, while millions of people have lost their jobs, their savings, their homes, and so many have been forced to wait in long food lines to get enough to feed their families-- while all that was happening, the billionaires-- the top 0.05 percent in the country, the Waltons, the Jeff Bezos’ of the world-- saw their collective wealth go up 40 percent."
Bloomberg News ran a very different kind of story this morning: Consumers Saved $2.9 Trillion During the Pandemic. Their Money Will Drive the Global Recovery. Apparently, Roland and I weren't the only gourmands who were eating at home. "Consumers in the world’s largest economies," wrote Simon Kennedy, "amassed $2.9 trillion in extra savings during Covid-related lockdowns, a vast cash hoard that creates the potential for a powerful recovery from the pandemic recession. Households in the U.S., China, U.K., Japan and the biggest euro-area nations socked money away when forced by the coronavirus to stay home and out of the shops, according to estimates by Bloomberg Economics. They are likely continuing to do so as restrictions remain and governments dole out stimulus. Half that total-- $1.5 trillion and growing-- is in the U.S. alone, the data show. That’s at least double the average annual growth of gross domestic product witnessed in the last expansion and equivalent to the annual output of South Korea. Such savings should provide fuel for economies to rebound once Covid-19 is finally wrestled under control and as vaccines roll out."
Pulling in the other direction is the risk is that people choose to use their savings to pay down debt or decide to preserve their household budgets because of ongoing health risks or concern that the jobs market will recover sluggishly.
Not everyone will be feeling flush. It’s those who earn the most who will likely have stockpiled, while lower-income households may have been forced to dip into their savings already and are the most likely to consume.
Some may be put off by the suspicion that at some point governments will jack up taxes to pay for their rescue programs.
“Short term, a lot depends on post-pandemic behavior-- which may take time to revert to pre-pandemic norms,” said Yelena Shulyatyeva, senior U.S. economist for Bloomberg Economics. “Medium term, whether the extra funds go to consumption, paying down debt, or even stay in the bank as a rainy-day fund, that’s a positive for growth.”