Where Did Pandemic Savings Go? Uneven Accumulation and Spending Patterns

ABSTRACT The COVID‐19 pandemic led to an unprecedented increase in households' savings. In this paper, we quantify excess savings and investigate their distribution across assets and households in Italy. We find these extra resources were primarily allocated to financial and real assets and distributed unevenly across households. In particular, by end‐2023, excess financial assets were about €110 billion: they were skewed towards less liquid activities amongst affluent families, whilst going into deposits amongst the less well‐off, making the latter vulnerable to erosion from escalating prices. Survey data suggest a muted role for excess resources in bolstering aggregate consumption: 3 years after the outbreak of the COVID‐19 pandemic, disadvantaged families held a modest amount of financial assets, whilst wealthier households could increase spending without dipping into their resources.