SAN RAFAEL, Calif.—The Great Recession has had a deep impact on consumers, and the country is now experiencing the economic "post traumatic syndrome," according to Dan Geller.
At the end of 2014, the total amount of consumer spending was $11.9 trillion, which equals the total amount consumers keep in their bank accounts, pointed out Geller, a financial behavior scientist who also assembles the Money Anxiety Index, which measures consumers' level of financial worry and stress.
Geller noted that historically, consumer spending, or personal consumption expenditures, was always greater than the total amount of savings consumers kept in bank deposits. “Even during the Great Recession, when consumer spending slowed down and bank savings increased, the amount consumers spent exceeded the total amount they held in the bank,” noted Geller.
Data from the U.S. Department of Commerce shows that in 2007 personal consumption expenditures was $9.8 trillion compared to $8.4 trillion in total bank deposits reported by the FDIC, explained Geller. “Consistently, since 2007, the amount of consumer spending exceeded the total amount of bank deposits until the end of 2014, when both, spending and savings, stood at $11.9 trillion each.
He said the finding indicates a temporary shift in consumers' financial behavior, who collectively keep one year worth of spending in their bank accounts as an insurance policy against future downturn in the economy.
Geller said the "post traumatic syndrome" is temporary, and consumer spending is very likely to gradually increase in a faster pace than savings.
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