(Bloomberg) — Bank of England policymaker Megan Green said the U.S. is outperforming Britain and the euro zone because Americans are more willing to spend their savings.
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“American consumers are relentless,” Greene said Friday during a panel discussion at the Delphi Economic Forum in Greece. “Across the developed world, all the fiscal measures during the pandemic have forced everyone to cough up excess savings. Americans are uniquely willing to spend money on things.”
Green said U.S. spending is 10% higher than it was before the pandemic. This contrasts with the eurozone, which is close to pre-pandemic levels, and the UK, where spending is still not back to pre-pandemic figures.
Her comments help explain why the United States is expected to be the fastest growing G7 economy again this year, while the eurozone's largest economies, Britain and Germany, languish at the bottom. .
Despite this gap, BOE officials are wary of cutting rates too soon, and Greene added his voice this week to warn about the threat of sustained inflation in a supply-constrained economy.
Markets fully priced in the first rate cut in September, around the same time the Fed is expected to start easing, and on Thursday signaled it could cut rates as early as June. slower than the European Central Bank suggested.
“During the pandemic, Americans received checks in the mail instead of having their wages replaced through the furlough program,” Green said. “People are happier spending what they consider a complete windfall than just getting what they had before and not having to work for it.”
He added: “The big question is what everyone's savings rate will ultimately be when this all settles down.”
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