The pandemic has left behind important changes in household behavior that affect the economy of the entire country. One of the most notable is a new trend to save more and spend less, which is observed especially in the wealthiest families. The country’s households as a whole saved 59,031 million euros in the second quarter of total gross income that amounted to 278,195 million in that same period. Or what is the same, they kept 21.2% of their disposable income for themselves. That percentage, known as the savings rate, is the highest in the last three years and practically the entire recent history of the Spanish economy, except for the 2020 confinement.
This is reflected in the data of the non-financial quarterly accounts which has been published by National Institute of Statistics (INE) this Monday. The savings rate recorded between April and June exceeded that of the second quarter of 2023 by 2.6 points and equaled that registered in the same period of 2021, still greatly influenced by the uncertainty generated by the pandemic and the restriction on spending capacity.
The second quarters of the year are a period in which it is normal for savings levels to be high because it is a time in which disposable income usually increases (for example, the extra summer pay for pensioners and many employees is paid in June). However, if the data is adjusted to remove the seasonal effect from the equation, the numbers still point in the same direction.
The seasonally adjusted savings rate stood at 13.1% in the second quarter. A figure somewhat lower than that seen in the first months of the year (14.1%), but still high compared to what was usual before the pandemic. The average savings rate of the last five years is double that seen between 2014 and 2019.
Behind him boom of savings that was experienced in the first months of the pandemic, where households saved 25% of what they earned, the savings rate was normalized by inflation. The sharp price increases, accentuated by the Russian invasion of Ukraine, returned savings levels to more normal figures. However, As inflation was reduced, savings skyrocketed again.
The data increasingly show that The pandemic has changed the way families manage budgets. Households have become more cautious in their finances, especially high-income ones. A recent estimate from the Bank of Spain indicates that practically half of the increase in savings is due to the 25% of households that earn the most each year. On the other hand, middle and low income families have barely been able to improve their savings capacity, as they have been drowned by inflation.
