Yahoo Finance

This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:

• The chart of the day

• What we're watching

• What we're reading

• Economic data releases and earnings

As the pandemic-era economy recedes from view, some of the frameworks that defined this moment have been abandoned.

Demand is just demand, rather than pent-up demand.

Supply chain problems are just supply chain problems — see: the Mississippi River's record low levels — rather than an outgrowth of pandemic-created economic whiplash.

And now the concept of consumer savings is no longer being seen as one defined by "excess" — either consumers have savings or they don't.

In a note to clients on Thursday, economists at Wells Fargo led by Tim Quinlan wrote the firm will move away from thinking about the concept of "excess savings" from US consumers and trying to estimate how long these savings will last.

Instead, the firm plans to focus on measuring aggregate household checking and savings account balances relative to pre-pandemic trends.

"For many households, the excess savings is long gone," the firm wrote.

"For others, especially wealthy ones, it can last much longer. If you don’t draw the money down, it can last indefinitely. ... Whatever the measure, excess liquidity will be less of a driver of spending going forward."

Wells Fargo's decision to move on from estimates of how quickly savings have been spent was largely spurred by recent revisions to government data that changed prior estimates on how much in "excess savings" was left in the economy by roughly $700 billion.

As the firm wrote: "... it is not sensible to hang your hat on an estimate subject to such comically large revisions. Households still have excess savings upon which to fund spending and that pool of money is getting smaller. This insight need not rely upon data subject to such massive revisions."

The concept of "excess savings" was always a murky one. And as the pandemic's fog lifts from the economy, these uniquely variable variables become less essential to understanding where things stand.

This shift also brings in a more straightforward framework for understanding the economy than what was required so often in the months and years after the pandemic's most acute impacts.

In the first Morning Brief of 2023, we explored estimates from economists about how much of this pandemic-era "excess savings" had been spent and how much remained in consumers' coffers. But the kicker in that post cited work from Pantheon Macroeconomics' Ian Shepherdson, who argued the labor market — rather than accumulated cash from stimulus programs and other forced lifestyle changes — would be the biggest influence on consumer habits.