The pandemic may have pushed you to save money with all the uncertainty out there about making ends meet, but financial experts say it could also pose a risk to our economy’s recovery.
Linda Kobler just got back to work at the Naples Soap Company, and though business is back in action, she said her spending won’t be.
“Right now as a family unit, we’re all being very careful and really only purchasing our necessities at this point,” she said.
Though the store sees several loyal customers, Kolber is noticing they’re cutting back, too.
“They are buying their core product but maybe not buying all the extras that they normally would be.”
It’s part of a trend: Americans are saving more of their money and spending less amid insecurity from the pandemic.
Studies show that in recent years, people have been saving somewhere between 3 cents and 6 cents on each dollar they make, but new data finds they’re now saving 13 cents of each dollar made.
“As a consumer becomes concerned about the economic outlook, the tendency is to cut back on spending and when consumers do this in mass, that lack of activity on the part of the consumer actually serves to slow or increase the slowing of the economy,” said Dr. Shelton Weeks, a finance expert at Florida Gulf Coast University.
He said there is hope, that saving now and spending later could help the economy down the road.
“It’s gonna allow people to make prudent investments down the road but that has a longer term effect than what we would see if consumers were to take money, say the stimulus money, and pour that back into the economy today.”
Aside from spending less and saving more, studies show that people are also slashing their debt on things like credit cards so they can be prepared if their jobs are threatened.