I fundamentally disagree. The economy should become more and more efficient, using saved money to keep prices low and to raise wages. The Fed’s decision to raise prices is fundamentally harmful to poor people, whose wages will never realistically do better than inflation.
Actually, the savings rate has gone up. People who have income are on average more concerned about their future income and saving for the future rather than assuming their income will monotonically increase.
People are going to save what they can during a recession, but I'm not sure that we're going to see the savings rate improve much in 2021.
Most people are grasshoppers not ants. In any case, under normal economic circumstances, the primary concern shouldn't be the savings rate per se, but the amount of income people have after meeting basic needs. You need to have that before you can even begin to save. The problem is that a high savings rate often leads to a weak domestic economy. Its only macroeconomic benefit is in providing a cheap source of capital to domestic industries that produce exported goods, assuming that capital outflows are restricted.
