📝Excess Liquidity Concentrating In Higher-Income Groups: Wells Fargo

Households still have excess liquidity, though it is declining and excess cash does look to be concentrated in higher-income groups who have a lower propensity to spend it

Ultimately, we will be moving away from high excess savings figures and will no longer make references to “how long the excess savings will last” as we think that question misses the mark. For many households, the excess savings is long gone. For others, especially wealthy ones, it can last much longer. If you don’t draw the money down, it can last indefinitely. Instead, we will consider the cash position of households by looking at savings and checking account balances relative to the linear trend prior to 2020.

Whatever the measure, excess liquidity will be less of a driver of spending going forward. Combine this with the fact that credit has become more expensive and harder to find and you are left with only real personal income as the sustaining driver of consumer spending. If the labor market retreats as we have in our forecast, that would clearly limit the capacity of consumer spending and would contribute to the mild contraction in Personal Consumption Expenditures that we have in our forecast. - Wells Fargo