US ‘Excess Savings’ Are Not Excessive

https://voxeu.org/article/us-excess-savings-are-not-excessive 

This reason this post matters is that financial market prognosticators are now obsessed with the idea that inflation is about to take off, due to the idea that there is lots of pent-up demand and that the stimulus accordingly will be Too Much. The economese way of saying that it that Americans have excess savings.

The countervailing evidence is considerable slack in the job market, business bankruptcies finally starting to accelerate as many concerns can’t hold on any longer, and nearly 10% of American at risk of losing their housing.

Yes, there has been an increase in food prices. That to a significant degree has been due to processing and distribution constraints thanks to Covid, such as meat packing plants being short staffed. Absent wild cards like weird weather hitting farms, some of that should abate. Similarly, some manufacturers may have dialed down their production overmuch, so what looks to them like pent up demand is more like a backlog due to them taking too capacity offline and being overly cautious in restoring it. In other words, these look like supply stories more than demand stories.