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U.S. consumers sock away more cash, pay down card debt, in COVID-19 times

·2 min read

Feb 5 (Reuters) - U.S. consumers stuffed more money intobank accounts and paid down their credit cards last month in asignal of how some of the $900 billion in coronavirus pandemicrelief enacted at the end of 2020 was put to use as the new yearbegan.

Commercial bank deposits jumped by $97.9 billion in the weekended Jan. 27, the most in three months, to a record of morethan $16.3 trillion, Federal Reserve data released on Fridayshowed.

Deposits were up by $226.1 billion from the end of Decemberand since early last March have shot up by nearly $3 trillion,essentially four years of savings growth in less than a year.

U.S. banks' outstanding consumer loans, excluding realestate, fell by $3.5 billion to a two-year low of $1.513trillion in the latest week, the Fed data showed.

The drop was led by another fall in credit card balances,which account for roughly half of non-real estate consumercredit and now stand at $735.6 billion, their lowest in morethan four years. Since March, when much of the U.S. economy wasfirst forced into shutdown mode to try to prevent the spread ofthe virus, households have slashed bank credit card debt by morethan 14%, or about $121 billion.

The deleveraging and savings boost has come to a good degreecourtesy of multiple rounds of coronavirus relief packages fromthe federal government, totaling roughly $4 trillion since lastspring.

Many economists and policymakers see the record levels ofcash in consumers' bank accounts - now equal to roughly 75% ofannual U.S. economic output versus 60% before the pandemic - asfuel for a powerful recovery later this year.

The hope is that vaccine deployment will give Americansconfidence to resume activities, such as dining out andtraveling, that they significantly curtailed as coronavirusinfections surged through last year.

Still, as Friday's monthly employment report showed, theeconomy has a long road to recovery. Just 49,000 jobs werecreated in last month, making January the third straight monthto show no substantial progress in restoring the nearly 10million jobs still lost since last February.

President Joe Biden pointed to the tepid payrolls report inpushing his case for another $1.9 trillion of COVID-19 reliefspending, a plan Democrats are aiming to force through Congressby mid-March.

(Reporting By Dan BurnsEditing by Sonya Hepinstall)