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Saturday, September 18, 2021

Dip in Savings Rate Suggests Bump in Consumer Confidence

The latest report from the Federal Deposits Insurance Corporation (FDIC) shows that Americans have lowered their bank savings by $32 billion in the second quarter of this year. The reduction in domestic savings is a reflection of a decrease in the Money Anxiety Index, which decreased by 3.5 index points to 54.1 in the first half of this year.

The link between bank savings and money anxiety has been documented in a new scientific study Dynamics of Yield Gravity. The study co-authored by Dr. Dan Geller, shows that people increase their savings when money anxiety increases, and vice versa. The study also shows that Americans nearly doubled their bank savings in the aftermath of the Great Recession from $6.1 trillion to nearly $11.8 trillion in the second quarter of this year.

“Banks and credit unions have to readjust their forecasts and deposits rates to reflect the new reality” says Dr. Dan Geller, Behavioral Economist at Analyticom.  “Moving forward, the competition for consumer deposits is going to be fierce and only financial institutions that are going to utilize optimal and scientific pricing models are going to succeed.”

Meanwhile, New York-based Conference Board just reported that consumer confidence is at its highest level since late 2000. Confidence has been boosted by steady hiring, a 16-year low in unemployment, contained inflation, home-price appreciation and stock-market gains, says Conference Board, which expects to see a boost in household spending.

This is all good news for retailers heading into the fourth quarter and the holiday shopping season.

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