Americans Have $5 Trillion in Cash, Thanks to Federal Stimulus

Just before the pandemic, in the fourth quarter of 2019, American households held about $1 trillion in what was effectively cash—currency and accounts against which checks could be written. By the second quarter of this year, the most recent period for which these statistics are available from the Federal Reserve, the amount had leapt to $4.7 trillion. As should be clear from the accompanying chart (which is adjusted for inflation and also includes a couple hundred billion dollars in nonprofit organization holdings because the combined statistics go back much further), nothing like this has happened in the past 70 years—though consumer spending statistics point to something similar having occurred during World War II.

It’s clear what started the cash buildup: The federal government put almost $1.5 trillion directly into Americans’ pockets over the course of 2020 and 2021 in the form of stimulus checks and supplementary unemployment benefits, with other aid programs indirectly funneling more. Those who kept their jobs and/or were above the stimulus-check income limits enjoyed windfalls from the stock and housing markets. Spending options were few, especially early in the pandemic, and until recently interest rates were so low that there wasn’t much point in moving money out of one’s checking account (or from under the mattress).