NVI Technical College Information

Economic Feasibility

Most of that money has been spent, as the savings rate has dropped

The next recession (20%): The Fed ’ s focus on inflation leads it to

from an average of around 9% before the pandemic to around 4.5%

minimize risks to the economy until it is too late. Although the

in the second quarter of 2023. Many households still have more

financial shock is smaller than in 2008, the already weak economy

cash on hand now than they normally would want, but how much of

contracts a substantial 1.9% by the end of 2024. The unemployment

that will they spend as the economy slows?

rate rises to 5.2% in 2025, which alleviates some — but not all — of the

pressure on the job market. The Fed eases monetary policy, and the

One possibility is that many consumers will remain cautious and

economy starts growing in 2026.

A

hold on to those savings even as they are able to go out and spend.

However, the households without savings have been running up

Sectors

their credit card debt — and those card balances have become a lot

Consumer spending

more expensive, with most cards charging over 20% on unpaid

The near-term outlook for consumer spending turns on two big

balances. An additional headwind to spending is the fact that

questions:

households with student loan debt will need to divert funds to serve

1. What will happen when consumers finish running down their

that debt — money that now will not be supporting additional

pandemic savings?

consumption.

In 2020, during the height of the pandemic, we estimated that

The baseline Deloitte forecast assumes that consumer spending will

households saved about US$1.6 trillion more than we forecasted

continue to grow, but slow to about 1.5% per year.

before the pandemic.

Source: Deloitte

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