On the left, the three lines show the savings rate as a share of disposable income for the U.S., the European Union and the UK. Savings rate spiked during the pandemic due to government fiscal support and a significant cut-back in spending, especially on discretionary items. Hence, this has led to expectations that consumption could recover sharply once the lockdown restrictions are lifted and more services re-open.
On the right, the area chart shows the breakdown of year-over-year change in disposable income in the U.S. During normal economic expansion, income after tax (purple) is the main driver of disposable income growth. Yet during recessions, such as the global financial crisis and the COVID-19 pandemic, income actually contracted while government transfers and benefits stepped up to maintain the standard of living for the general public. This was particularly aggressive in 2020 when the U.S. government approved several rounds of fiscal stimulus which provided additional support to the unemployed and low income households.