In „normal times“, the savings rate of private households in Germany follows a seasonal pattern: in the first quarter – after Christmas and before the vacation season – citizens put a high proportion of their income on the high side at an average of just over 14 percent, while the savings rate in the following quarters is significantly lower at around 9 to 10 percent. As a result of the Corona crisis, however, the usual pattern is being seriously disrupted this year.
Already in the first quarter, the savings rate of 16.5 percent was significantly higher than in previous years, and in the second quarter it even shot up to 20.1 percent. The reasons for this are to be found in the fear of income losses due to short-time working or unemployment, in lockdown and travel restrictions, which massively impeded private consumption, especially in the first half of the second quarter, and in the reduction in VAT announced at the end of the second quarter for the second half of the year. However, the fact that the savings rate rose so sharply is also due to the fact that private household income has so far remained remarkably stable given the extent of the ongoing corona crisis: Compared with Q2/2019, disposable income in Q2/2020 was just 0.8 percent lower. Private consumption, on the other hand, slumped by 11.7 percent in nominal terms.
The savings rate is likely to remain high in the second half of the year as well, rising to around 16 percent for the year as a whole, compared with 10.9 percent in 2019. The second quarter of 2020 in particular shows very clearly that, although income-supporting measures in the context of the corona crisis were successful in stabilizing the disposable incomes of private households, the savings rate nevertheless rose sharply and consumption slumped. Against this backdrop, the extension to the end of 2021 of the generous regulations governing short-time working adopted by the Federal Cabinet last week can be viewed critically. This is especially true if this hinders the structural change in the economy and the economy loses efficiency because skilled workers are kept in companies in crisis, while other companies with successful business models are desperately seeking qualified personnel.