Well into the pandemic, an amazing thing happened. Even with all of the shutdowns, because of the federal fiscal aid, people survived, and many increased their savings. (After all, where were they going to spend their money?)

Now comes the bad news. An inflation wave has kicked up costs for consumers at a year-over-year 8.6% rate as of May (June's numbers coming out on July 13). Credit card use is rising while savings are dropping and the hope of economists that most consumers would be able to hold out until inflation cooled is now up in smoke. That's potentially big trouble for the economy.

There was a big uptick in excess personal savings due to the pandemic, which is "the cumulative amount by which personal saving during the pandemic has exceeded a counterfactual path without COVID-19," according to the Federal Reserve Bank of New York. How much it ran to depends on the source. The New York Fed said $1.6 trillion in December 2020. The Wall Street Journal quoted Moody's Analytics at $2.7 trillion at the end of 2021, a number that TD Economics also used.