The drop in cash reserves has vast implications for the working class and could damp consumer spending, a large share of economic activity.

Infusions of government cash that warded off an economic calamity have left millions of households with bigger bank balances than before the pandemic — savings that have driven a torrent of consumer spending, helped pay off debts and, at times, reduced the urgency of job hunts, the New York Times reports.
But many low-income Americans find their savings dwindling or even depleted. And for them, the economic recovery is looking less buoyant.Over the past 18 months or so, experts have been closely tracking the multitrillion-dollar increase in what economists call “excess savings,” generally defined as the amount by which people’s cash reserves during the Covid-19 crisis exceeded what they would have normally saved, as the New York Times reports.

The poorest households saw the greatest impact from stimulus.

But spikes in savings faded quickly.

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