Maybe a recession won't be that bad

Americans overall had excess savings of $2.7 trillion in the first quarter, according to Moody’s Analytics’ calculations based on Fed and other government data. Although more than half of that was held by households in the top 10% of income, those in the bottom 20% had on average about $5,700 more cash in hand than they otherwise would have without the federal aid and the effects of the pandemic.

That extra savings, along with historically low household debt and loan-servicing burden — many homeowners locked in low mortgage rates before the recent hikes — suggest most people are better positioned financially and could help make the next recession milder.

At Bank of America Institute, economist David Tinsley saw a noticeable uptick in BofA customers using their credit cards last month, as was the case at many banks. High gas prices, he says, are hitting lower-income families hard and also cutting into spending for goods.

But looking at BofA customers’ savings deposits and checking account balances, Tinsley said, “households continue to have high buffers relative to before the pandemic.”