2019, American households held about $1 trillion in what was effectively cash—currency and accounts against which checks could be written.
By the second quarter of this year, the most recent period for which these statistics are available from the Federal Reserve, the amount had leapt to $4.7 trillion.
Less clear is why the cash stash has kept growing this year and what the economic impact might be.
A cash cushion can insulate consumers from the Fed’s rate hikes, but that probably makes it harder for the central bank to lower inflation, forcing even more rate hikes.
It will be interesting to see if third-quarter numbers, due in December, finally show a drop.
Justin Fox Bloomberg 11 november 2022