Fear is the enemy of the economy. Here’s what bank deposits reveal
Data on the growth of bank deposits in Italy analyzed by Giuseppe Liturri
The data on the growth of bank deposits in Italy starting from the explosion of the Covid epidemic was commented with great evidence in recent days.
But the increase in the overall figure does not capture a decisive and qualifying aspect of the phenomenon still in progress.
By breaking down the data into the three classes of deposits of companies, consumer and producer households, respectively equal to 385, 1,110 and 76 billion as at 31/12, it is noted that the growth takes on significant dimensions, especially among companies and producer families. At the same time, the growth trend of consumer household deposits is substantially constant.
The graph puts the level of deposits at 100 in January 2019 and follows its trend until the end of December 2020, processing the data published by Bank of Italy a few days ago .
The jump in the growth rate occurs between April and May, coinciding with the hardest phase of the containment measures, and continues for all the remaining months.
The arrival situation is impressive: business deposits increased by 43% compared to those of the beginning of 2019, while those of producer families grew by 26% and those of consumer families grew by a more modest 11%.
It should be noted that in the course of 2019, the three classes of depositors had moved with a much less differentiated growth rate. The roads divided with the advent of the pandemic.
How to interpret this data?
Fear and uncertainty have stopped the productive engine of our country. And this happened precisely in the classes of depositors most sensitive to the economic situation. Companies where investments are decided, more than families where consumption is decided.
It seems very probable that even the aid – which, among a thousand contradictions and delays, flowed into the production world – remained unused on the accounts of companies and was not spent.
A classic liquidity trap.
A situation of fear and uncertainty supported by a sample survey by the Bank of Italy and represented by the graph above: regardless of the harshness of the containment measures (yellow, orange or red region), the predominant cause in the decisions to reduce spending is always and only fear.
And fear is the enemy of the economy. This should always be kept in mind by those who hysterically and contradictory spread news on delicate health issues.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/la-paura-e-nemica-delleconomia-ecco-cosa-svelano-i-depositi-bancari/ on Thu, 18 Feb 2021 08:34:16 +0000.