As 2021 wrapped up, we likely saw the peak in the benefits of COVID stimulus. The savings rate spiked in 2020 and has steadily come back down to pre-COVID levels. The amount of stimulus pumped into the system was more than enough to cover the loss in income for most households. Incomes were sustained while the supply of goods for consumers shrank. This led to supply chain issues and eventually higher prices. Households who could not spend money on services shifted more towards consumer goods. The likely effect is that some purchases were pulled forward and demand will begin to normalize and possibly slow. Inventories will likely build up enough to bring supply/demand imbalances in line.

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