US households have exhausted the pile of cash squirreled away during the pandemic, according to research from the Federal Reserve Bank of San Francisco.

“The latest estimates of overall pandemic excess savings remaining in the US economy have turned negative, suggesting that American households fully spent their pandemic-era savings as of March 2024,” San Francisco Fed economists Hamza Abdelrahman and Luiz Oliveira said in a blog post published Friday. The duo have been updating their estimates regularly over time, and last year flagged that the US savings surplus was lasting longer than previously expected, helping to hold up spending.

Pandemic-era excess savings — the difference between actual savings and the pre-pandemic trend — swelled to $2.1 trillion from March 2020 to August 2021. From that point, households drew on those savings at an average monthly pace of $70 billion, and that spending accelerated to $85 billion per month last fall before dropping to -$72 billion in March, according to the researchers.

Americans were able to build up extra savings while stuck at home during the pandemic, in part due to extraordinary government support. The reserves are widely thought to have helped the US economy continually defy forecasters’ expectations for a downturn, even as the Fed implemented a historically rapid interest-rate hiking cycle.

As long as Americans can keep up their spending through other means — like continuous employment or wage gains, other savings, or more debt — the exhaustion of pandemic cash is unlikely to result in a drop in consumer spending overall, Abdelrahman and Oliveira wrote.

But cracks may be forming. Last week, Amazon and Starbucks earnings reports both pointed to an increasingly budget-conscious consumer, and a pullback in demand would be in line with a Bloomberg Economics forecast for a slowdown in consumer spending this year from 2023’s robust pace.

New York Fed President John Williams said Monday the bank has heard from retailers that many consumers are being “much more careful about their spending and we’re seeing some slowing there.”

Lower- and moderate-income households in particular have spent down their pandemic reserves and “we are seeing some delinquency rates on credit cards and auto loans pick up,” Williams said at the Milken Institute Global Conference in Los Angeles.

“In the big picture, it’s an economy that’s still healthy but growing somewhat slower,” he said.