If you had to guess, how much money do American households have sitting in their bank accounts today compared to December 31, 2019?
The answer: household checkable deposits is up a whopping 300% in the last 4 years. The more I dug into this the more confused I became.
Here are the household asset levels for different asset types over the last four years.
Q4 2019 ——>Q1 2023 in millions
Checkable deposits: from 980,550 to 4,188,022
Money market: from 2,159,362 to 3,175,515
Time deposits: from 9,552,703 to 9,525,293
Corporate equities: from 29,122,532 to 35,820,586
The growth rate of Checkable deposits has far outpaced other asset classes at a time where the big banks are not offering competitive interest rates. The pre COVID all time high was just 1.26 trillion.
I know the explanation that most will jump on is that the 1% is just hoarding cash but that doesn’t fully explain the jump.
The data splitting out the data by wealth brackets hasn’t been updated since Q2 2022 but prior to then there was a 6X jump for the 50-90th wealth percentile and the bottom half in wealth’s bank account balances grew from 102,426 pre COVID to 277,455 in Q2 2022.
Most of the jump occurred during COVID stimulus spending but has still grown slightly over the last four quarters of data.
I found this baffling and was wondering if anyone has a good explanation for this.
My main ideas are that people have saved up money to pay off student loans that’s still sitting in bank accounts or that a lot of people are saving up to buy houses but I was wondering if anyone else had any better ideas.
Nevertheless, there is a ton of cash sitting on the sidelines. If households decide to pile more money into the stock market they have a lot of ammunition to power the bull market higher.
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