At the end of 2014, the total amount of consumer spending was $11.9 trillion, which equals the total amount consumers keep in their bank accounts. Historically, consumer spending, or personal consumption expenditures, was always greater than the total amount of savings consumers kept in bank deposits. Even during the Great Recession, when consumer spending slowed down and bank savings increased, the amount consumers spent exceeded the total amount they held in the bank.

Data from the U.S. Department of Commerce shows that in 2007 personal consumption expenditures was $9.8 trillion compared to $8.4 trillion in total bank deposits reported by the FDIC. Consistently, since 2007, the amount of consumer spending exceeded the total amount of bank deposits until the end of 2014, when both, spending and savings, stood at $11.9 trillion each.

This finding indicates a temporary shift in consumers' financial behavior, who collectively keep 1 year worth of spending in their bank accounts as an “insurance policy” against future downturn in the economy. The experience of the Great Recession had a deep and lasting impact on consumers, and we are now seeing the economic “post traumatic syndrome” from the Great Recession. This phenomenon is temporary, and consumer spending is very likely to gradually increase in a faster pace as savings.

Dr. Dan Geller is a financial behavior scientist exploring the link between the level of financial fear and the savings and spending habits of consumers. In his book, Money Anxiety, Dr. Geller uncovers the mystery of the financial mind, explaining why we hate to lose more than we love to win and why we spend when safe and save when scared.

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