Saving rate is lower and this is a macro drag

 

The savings rate exploded to the upside during the pandemic. The first savings spike occurred when expenditures were cut because businesses were not open in 2020. The second spike was associated with further stimulus in 2021; however, the excess savings is ending. The savings rate is now below average and the amount of savings, while growing in 2023 is depleted to levels below 2018 and 2019. There is no extra money available for added spending, so future growth is likely to be lower. This is another reason for a soft landing even with a strong labor market.