Three Charts For Your Consideration

One of our main thoughts as we come out on the other side of our national lockdown is the horde of cash that's been piling up since we've been locked up.  Not only does that reflect people that have quit spending because they're worried about the future or their jobs, but it also shows that when you're locked down you really can't go out and spend much money.  This is what we said back on April 14, 2020:

"We are rightly focusing on the sick and those suffering enormous economic hardship right now. As a society, it says much of us that so many are stepping up and trying to do their share. But what isn’t being talked about much is all the people who still have a job and are still receiving a paycheck. We’re also not focusing on the millions that are still getting Social Security checks or other economic payments like a pension. This is hundreds of billions of dollars sitting on the sideline that at some point will get put back into the economy on things besides groceries and medical supplies. Once people regain some confidence in their own financial situation and stop worrying about close contact with other people, there is a higher probability that the demand side of the economy will pick up substantially and perhaps quicker than many expect. Now, I don’t have any expectation that things will return to where they were overnight, but I do think it’s reasonable to think that sometime this summer we will start to see economic growth. If it looks like we’re getting a handle on the disease, growth could accelerate as confidence returns."

Now we're starting to see some of the evidence of the extraordinary amount cash that's being stored into the system.  The first chart below from the twitter feed of Jason Goepfert that shows the unprecedented amount of money investors stuffed into money market mutual funds back in March.  That's nearly $700 billion dollars that was parked on the sidelines in one month.  I'd assume April will show another big money market build as well.  

Along with all that cash being stored in money markets is the a savings rate that at nearly 14% dwarfs any previous record.  This chart and the next can be linked to an article over at the website Zerohedge here.

Finally note below the pay down of credit lines by households through March.  The savings rate as well as credit  pay down likely continued in April.

This is money folks looking for a home.  Whether it's going to be invested or spent, it represents real dollars that can be put to work once people can get back out in the world and they feel safe to do so.

Back Tuesday.