Household savings during and after the COVID-19 crisis: Lessons from surveys

Households’ habits have changed dramatically during the COVID-19 crisis. At the macroeconomic level, the pandemic has triggered a sharp drop in their consumption and an explosion in their savings. Survey findings suggest that this change in behaviour is largely a consequence of the policy measures taken to curb the epidemic which restricted the possibilities for consuming goods and services and, in doing so, led to forced savings.

That said, the COVID-19 crisis was characterized by heterogeneity and it is very evident at the level of both household consumption and savings. In particular, low-income households have been more affected by temporary unemployment and a deterioration in their financial situation, with the concomitant negative impact on their consumption expenditure.

The decline in consumption was also more marked for the working population, with no financial buffer and/or residing in Brussels or in Wallonia. As for savings, they were mainly concentrated in the hands of high-income households, as those with the lowest incomes have been unable to save.

Moreover, part of the surplus savings related to the COVID-19 crisis has been invested in more risky or less liquid assets, such as financial or property investment. Hence, most of these surplus savings does not seem to be destined to shore up consumption of goods and services as part of the economic recovery.

Survey data measuring consumer expectations also point in this direction, therefore contesting the assumptions that pent-up demand or revenge consumption would be the main driving force behind the economic recovery, at least for the next few months.