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During the COVID-19 pandemic, the federal government authorized multiple stimulus checks. This money went to millions of eligible Americans, and new data suggests that it made a huge and lasting impact on the financial lives of individuals across the country.
Specifically, data from the Federal Reserve has revealed a major increase in the aggregate amount of cash that Americans have on hand. Here's what you need to know about just how much extra money people have been left with.
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Americans have trillions in extra cash on hand
According to data from the Federal Reserve, American households had a collective total of around $1 trillion of cash or cash equivalents in the fourth quarter of 2019. This is money that is held in accounts that checks could be written from.
As of the second quarter of 2022, however, bank balances have grown dramatically. In fact, the Federal Reserve data shows that the total aggregate balance in checking accounts across the country has grown to $4.7 trillion.
This is a shocking increase, and one that has never occurred before in more than seven decades of collected data.
How did stimulus checks help Americans amass so much money?
Many financial experts attribute the sharp increase in checking account balances to stimulus checks. And there's data to back this up. The U.S. Bureau of Economic Analysis revealed that the savings rate had climbed to 17% in 2020, during the heart of the pandemic. This was the highest personal saving rate since Americans collectively saved 27.9% of income in 1944 during World War II.
The stimulus checks that were sent out added up to around $1.5 trillion, so the fact that Americans have grown their net worth by so much more than that suggests many people used the money wisely to grow their net worth over time. For example, Americans may have used the funds to invest in assets that provided a generous return or to start a business or develop skills that caused their incomes to climb.
The good news is, stimulus checks are continuing to be delivered on the state level (although not on the federal level). In fact, almost half of all U.S. states have provided some additional funds to eligible residents this year. This means those who keep using this cash from the government wisely can hopefully help to ensure that the combined amount of money in Americans' checking accounts keeps growing over time.
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