#Pent up demand covid drivers#

The bars represent the share of net savings allocated to each of the options. Net savings are the difference between the amount saved and dissaved since January 2020. Chart B indicates that respondents in March 2021 expected at least 74% of excess net savings accumulated since January 2020 not to be spent within the next 12 months, thus tempering expectations of widespread pent-up demand.Īllocation of net savings in the next 12 months The results may also capture some savings that are being spent on regular planned consumption, in particular on big-ticket items. In March 2021 the survey asked respondents two specific questions about their savings: (i) how much have you saved (dissaved) since January 2020 and (ii) how, over the next twelve months, do you plan to use (react to) the (reduced) amount of savings or financial investments you have accumulated since the start of 2020? Combining the replies to these questions allowed the share of accumulated net savings that households planned to consume in the following year to be computed (Chart B). The bulk of accumulated COVID-19-induced savings were not expected to be spent until at least the spring of 2022. This arguably limited the upward pressure on consumption from the expected unwinding of household savings as the pandemic started to subside.

At the same time, households who saved tended to be less liquidity-constrained and had a lower MPC. This confirms that COVID-19-related government support was mainly targeted at households that had to draw on their savings, as they were adversely affected by the pandemic. Combining the information above with information from regular CES survey modules allows an economic profile of saving/dissaving households to be sketched. Panel b shows the share of respondents reporting that (one or more) specific reasons were the most important for their saving behaviour.ĭissavers generally received more government support, were more often liquidity-constrained and had a higher marginal propensity to consume (MPC) than savers. (left-hand scale: percentages of respondents right-hand scale: percentages of respondents within specific group) Savers/dissavers and motives for saving/dissaving Overall, these findings are in line with earlier evidence suggesting that the surge in the aggregate saving ratio was driven mostly by involuntary savings due to COVID-19 restrictions and the fear of getting infected but that precautionary motives also played a significant role. the incurrence of additional expenses) for having to draw on their savings. Many dissavers also referred to COVID-19-related reasons (e.g. On the other hand, among those who dissaved, an unexpected income loss was cited as the most important reason. On one hand, for those who saved, COVID-19-related restrictions/fear of infection and precautionary motives were the most important reasons.

#Pent up demand covid drivers#

The drivers of households’ saving behaviour differed across savers and dissavers (Chart A, panel b). Chart A (panel a) shows that most households did not change the amount of savings they held in the course of 2020, while about 20% increased and around 16% decreased their stock of savings. The data show that during the coronavirus (COVID-19) pandemic most households were not able to increase their savings.

The answers to these questions provide information about the drivers of the increase in savings recorded in euro area aggregate data. Some special-purpose questions were fielded asking households whether in 2020 they saved or dissaved, by how much and why they did so. The ECB Consumer Expectations Survey (CES) asked households in 20 about their saving behaviour and the underlying motives.

Published as part of the ECB Economic Bulletin, Issue 5/2022. Prepared by Maarten Dossche, Dimitris Georgarakos, Aleksandra Kolndrekaj and Francisco Tavares