- The liquid assets of US Households has surged to an “unprecedented” $18 trillion, Bank of America said.
- Household liquid assets, which includes cash deposits, has surged a remarkable $5 trillion in 2020.
- “Increased savings and household wealth adds further reinforcement to consumer resilience,” Bank of America said.
Our Chart of the day is data highlighted by Bank of America and illustrated by YCharts, and it helps show just how resilient the US consumer really is.
American households hold just under $18 trillion in liquid assets, which includes cash deposits, representing an astounding increase from the $10 trillion level in 2013. Consumers added $5 trillion in liquid assets in 2020 alone.
Bank of America called the near-record high level of deposits held by consumers as “unprecedented” in a note on Tuesday.
“Still saving for a rainy day. COVID-era stimulus remains in the economy three years later,” Bank of America said. “Our economists estimate that consumers still have $950 billion in excess savings. Household savings are growing at 8.5% per year, a clip not [seen] in nearly 30 years.”
The bank said consumers’ staggering cash position means that they “won’t have to break their piggy banks” in the event that the economy goes through a mild recession.
“Increased savings and household wealth adds further reinforcement to consumer resilience,” Bank of America said.
The trend in rising cash balances held by consumers can also be seen in assets held in money market funds, which has surged to nearly $6 trillion held by both institutions and retail investors.
And perhaps even more encouraging is the fact that consumers are finally getting a solid interest rate on their cash since the Federal Reserve began aggressively hiking interest rates in March 2022. Near 5% interest rates on cash could translate into nearly $1 trillion in risk-free returns for consumers.
