Define excess savings.
To me the only semi reasonable definition would be savings over and above x number of months of current essential overhead.
Exactly. Everybody defines that differently. That's why I take these alarmist articles with a grain of salt.
For example, one might have less than $1,000 in a savings account but also have $200,000+ in equity on their home, a million dollars in their 401k and fully paid off credit cards. Should that person be considered a hardship case and living paycheck to paycheck? Probably not but they tend to get lumped into surveys like this to make a problem seem bigger than it really is.
Now I don't recommend being in the situation described above. Taking out a home equity loan, an early withdrawal from a 401k, or running up credit cards to make ends meet is never an optimum strategy. But I would not consider those people poor. Just poor managers of money.
Many financial gurus will tell you to have 90 days worth of living expenses in the bank, easily accessible, so that you can cover unexpected expenses and have a cushion against a loss of income for a while. Personally, I try to keep at least six months of expenses in cash that is readily available without having to tap into your other assets or credit. That way if I suddenly lose my job, I don't have to panic. I can find another source of income or more likely, I can use my job loss as an opportunity to sell my home, pull up stakes, and move to a friendlier and less expensive part of the country (I live in the NYC metro area).
“Calculating ‘excess savings’ is simple: they are the cumulative amount by which personal saving during the pandemic exceeded a counterfactual path without COVID-19.”
https://voxeu.org/article/us-excess-savings-are-not-excessive
It comes off as a way to blame the downstream damage the government caused by “excess spending” on the people that received the stimulus checks.
Excess savings is the amount by which savings rose over a baseline as a result of the pandemic and the fiscal policy interventions in 2020 and 2021. (Unemployment benefit boosts, PPP, stimulus checks, refundable child tax credit, muni government bailout, etc.) Added to that, behavioral changes in the pandemic increased household savings because there were fewer leisure and entertainment expenditures (vacations, restaurants, movies) The numbers were enormous, and some economists draw a line from that to the lack of available workers. Why work delivering pizzas on Sundays when you still have 5000 in the bank from last year.