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Boost from “excess” savings now exhausted

The resilience of consumption over the past year is partly because households have been willing to save less of their income than before the pandemic, which lends some support to the idea that consumers have been drawing down a stock of “excess” savings built up in 2020 and 2021. Even if we ignore the flaws in that theory, however, the key point now is that any savings buffer has been largely depleted.

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