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5% Interest Income from CDs, T-Bills, Money Markets Fueled Spending. Higher Borrowing Costs Cut Spending. And on Net?

June 12, 2023

by Wolf Richter Wolf Street

Interest income is a big number that got a lot bigger, and people are spending some of it.

Interest income to households is surging, fueled by 5% money-market funds, 5.2% CDs and Treasury bills, 4.5% savings accounts, and other fixed-income products that people have invested many trillions of dollars in. Those rates are now producing a significant increase in cash flow to those households – and many are spending this extra cash, especially retirees that have gotten bludgeoned by the Fed’s interest-rate repression over the prior 15 years.