NEW YORK, Feb 6 — US consumers stuffed more money into bank accounts and paid down their credit cards last month in a signal of how some of the US$900 billion (RM3.6 trillion) in coronavirus pandemic relief enacted at the end of 2020 was put to use as the new year began.
Commercial bank deposits jumped by US$97.9 billion (RM298.5 billion) in the week ended January 27, the most in three months, to a record of more than US$16.3 trillion, Federal Reserve data released yesterday showed.
Deposits were up by US$226.1 billion from the end of December and since early last March have shot up by nearly US$3 trillion, essentially four years of savings growth in less than a year.
US banks’ outstanding consumer loans, excluding real estate, fell by US$3.5 billion to a two-year low of US$1.513 trillion in the latest week, the Fed data showed.
The drop was led by another fall in credit card balances, which account for roughly half of non-real estate consumer credit and now stand at US$735.6 billion, their lowest in more than four years. Since March, when much of the US economy was first forced into shutdown mode to try to prevent the spread of the virus, households have slashed bank credit card debt by more than 14 per cent, or about US$121 billion.
The deleveraging and savings boost has come to a good degree courtesy of multiple rounds of coronavirus relief packages from the federal government, totaling roughly US$4 trillion since last spring.
Many economists and policymakers see the record levels of cash in consumers’ bank accounts — now equal to roughly 75 per cent of annual US economic output versus 60 per cent before the pandemic — as fuel for a powerful recovery later this year.
The hope is that vaccine deployment will give Americans confidence to resume activities, such as dining out and traveling, that they significantly curtailed as coronavirus infections surged through last year.
Still, as yesterday’s monthly employment report showed, the economy has a long road to recovery. Just 49,000 jobs were created in last month, making January the third straight month to show no substantial progress in restoring the nearly 10 million jobs still lost since last February.
President Joe Biden pointed to the tepid payrolls report in pushing his case for another US$1.9 trillion of Covid-19 relief spending, a plan Democrats are aiming to force through Congress by mid-March. — Reuters
Source: Malay Mail
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