The US: Savings will continue to support private consumption

■　Excessive savings on the stock side are alive and well, underpinning personal consumption

 According to the U.S. Employment and Change in Employment Survey (JOLT) in July, the number of job openings was about 11.24 million, close to the peak of about 11.55 million in March this year, indicating strong labor demand. According to August employment statistics, as of August, the prime-age (25-54) working population (the sum of employed and unemployed) to the working-age population (16 and over) was 82.8%, indicating that it was approaching the pre-COVID-19 disaster (January 2020, 83.1%). The tight supply and demand in the labor market have not changed, and upward pressure on wages is expected to continue.

 In July, Americans' per capita disposable income (seasonally adjusted, annualized) was a nominal $55,966, up 0.2% from the previous month. It is about 11% higher than before the COVID-19 pandemic ($50,478 in February 2020), showing a steady upward trend against the backdrop of wage growth. However, in real terms, considering price trends, it has been flat at $45,464 this year, almost in line with pre-COVID-19 crisis levels ($45,453 as of February 2020). While the decline in purchasing power caused by inflation has stopped, it is unlikely to lead to an increase in personal consumption.

 In this case, the savings rate was 5.1% in the April-June quarter, down from 5.6% in the January-March quarter. It was lower than before the COVID-19 pandemic (Oct-Dec 2019, 7.4%). On the flow side, the pace of savings can be seen to be more restrained than usual. On the other hand, inventory savings have been accumulating since the COVID-19 crisis. According to the statistics of capital flows released by the Federal Reserve Board (FRB) on the 9th, US household deposits (the sum of savings/current accounts, savings/term deposits, and money market funds) in the April-June quarter totaled $17.9 trillion. A significant increase compared to the pre-COVID-19 pandemic ($13.7 trillion in the January-March 2020 quarter). Personal consumption is unlikely to suffer an early shock, as the reduction in real disposable income due to rising inflation will be compensated by benefits and other means of withdrawing excess savings. However, it was down about $0.2 trillion from the previous quarter ($18.1 trillion), the first quarter-over-quarter decrease since the April-June 2019 quarter. There is a possibility that the trend has changed, and it will be necessary to carefully assess the pace of the withdrawal of excess savings going forward.