Consumers around the world have stockpiled an extra US$5.4 trillion in savings since the coronavirus pandemic began and are becoming increasingly confident about the economic outlook, paving the way for a strong rebound in spending as businesses reopen.
 
Households around the globe accumulated additional savings compared with 2019’s spending pattern, equating to more than 6% of global gross domestic product by the end of the first quarter of this year, according to estimates by credit rating agency Moody’s.
 
And booming global consumer confidence suggests shoppers will be willing to spend again as soon as shops, bars and restaurants reopen when restrictions to control the spread of the virus are eased.
 
In the first quarter of this year the Conference Board global consumer confidence index hit its highest level since records began in 2005, with significant uplifts in all regions of the world.
 
Mark Zandi, chief economist at Moody’s Analytics, said:
 
“The combination of an unleashing of significant pent-up demand and overflowing excess saving will drive a surge in consumer spending across the globe as countries approach herd immunity and open up.”
 
If consumers spend about a third of their excess savings they would boost global output by just over 2% both this year and next, Moody’s estimated.
 
In 2020, household saving rates in many advanced economies reached their highest levels this century, according to OECD data, and bank deposits increased rapidly in many countries.
 
The excess saving was highest in developed economies, in particular North America and Europe where lockdowns have been widely implemented and government spending has been high.
 
However, the impact of the pandemic has been highly unequal and savings have been largely accumulated by richer households in all regions.
 
The Morning Consult consumer confidence index showed overall steady improvements between January and April across 15 large economies, but a larger share of lower income households reported their financial conditions had worsened compared with a year ago.
 
More than one-third of richer households in many countries, including China, Australia, Italy, Russia and the US, said now was a good time to make big purchases, but that was not the case for poorer households, data from Morning Consult showed.
 
The data suggests that companies poised to do particularly well as the global economy reopens include value retailers like Target (+0.05%) and Walmart (-0.64%), as well as automakers like Ford (-0.98%), General Motors (-1.41%) and Tesla (-3.40%).