While the European keeps his savings, the American spends his money

Europeans continue to increase their savings while Americans reduce them sharply. More cautious than ever, Europeans chose to increase their precautionary savings. Last year, the American chose to spend his savings liberally. In the United States, the savings surplus will therefore be completely exhausted by the end of the year.

According to Johan Geeroms, Director Risk Underwriting Benelux, this development in European savings is also confirmed by the increase in deposits in traditional regulated savings accounts with the main Belgian banks. Even if record inflation weighed on our savings capacity in the second half. In the Netherlands, according to recent figures from the Dutch central bank (DNB), we even saved 34 billion euros more than in 2021.

‘Everything is happening as if the period of the covid-19 continues. Uncertainties abound. Inflation and the war in Ukraine are prompting us to protect ourselves from whatever else might happen. For their part, Americans feel safe, far from war. While they too had saved a lot during the covid-19. But, last year, they couldn't resist the temptation to spend. They are back to consuming like the good old days. The economy obviously took full advantage of this. Europe could also benefit from such a boost, but that time has not yet come. Despite the huge savings surplus, the recovery in consumer spending will therefore not be in order this year.‘

Europe seems to be taking a liking to saving,’ underlines Johan Geeroms. Labor markets are strong. It's good for wages. Lower inflation makes the cost of living more affordable again. The money released can be placed at higher interest rates. Last year, European households channeled no less than 80 billion euros into more profitable long-term savings accounts. Johan Geeroms points out that savings are concentrated mainly among high incomes. Because inequalities, already significant, have increased further due to covid and the war.
In the US, the savings rate (the share of income that is saved or invested) has fallen well below its pre-pandemic level. Now that the economy in the United States looks set to fall into recession, household incomes are under increasing pressure. However, while the job market is much tougher there than here, Americans have largely exhausted their savings. Our analysts are therefore counting on the fact that the savings surplus in the United States will be completely exhausted by the end of the year.
In the European Union, the rise in interest rates has led households not only to save more, but also to reduce, to an unprecedented extent, their demand for mortgage loans. Demand for business loans has also suffered from higher interest rates. These developments weaken the economy. If economic growth does not suffer too much, it is mainly due to public aid. Households and businesses are now used to being protected against negative economic shocks.

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