The permanent income hypothesis in its RatEx-no liquidity constraint version says that consumption will adjust upward fully in response to a windfall. This will mean it will take a while to decumulate the “excess savings” transferred during the pandemic. How much remains? Here’s a guess from Torsten Slok:

Source: Torsten Slok, Apollo Advisers, June 5, 2023.

Another way to look at this is to look at the flow of income and consumption (in real terms):

Figure 1: Consumption (blue), personal income ex-transfers (tan), and disposable personal income (green), in billions Ch.2012$ SAAR. NBER defined peak-to-trough recession dates shaded gray. Source: BEA, NBER. 

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