Tuesday, September 15, 2020

A Bigger Stash of Cash

Did your stash of cash grow as the coronavirus pandemic gained strength in the spring of 2020? If you say yes, you're not alone. Americans carried more cash on their person and stored more cash in their home in May 2020 than they did in 2019. 

The Federal Reserve fielded its Diary of Consumer Payment Choice in October 2019, collecting data from a representative sample of the population on the ways Americans pay for things. Two months later, Covid-19 appeared on the worldwide stage, making irrelevant the data collected in October. Rising to the occasion, the Federal Reserve went back into the field and surveyed respondents again in May 2020 to measure changes in payment behavior due to the pandemic. The supplemental survey discovered bigger piles of cash in pockets, purses, and desk drawers. 

The amount of cash the average person carries grew 17 percent between October 2019 and May 2020, the supplemental survey found, rising from $69 to $81. The amount of cash the average person has tucked away in their home, office, or car nearly doubled, growing from $257 to $483. 

The increase in cash holdings "may point to the relief cash can offer in times of uncertainty and to its role as a contingency payment method," the Federal Reserve explains. Cash becomes a security blanket. The emotional rather than practical bond with cash is confirmed by another fact revealed by the supplemental survey. The 63 percent majority of respondents had not used cash to make any in-person payments since March 10, 2020. Most aren't hoarding cash for purchases. They are hoarding cash for protection. 

Source: Federal Reserve Bank of San Francisco, Consumer Payments and the Covid-19 Pandemic: A Supplement to the 2020 Findings from the Diary of Consumer Payment Choice

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