Let’s talk about excess savings, the roughly $2.5 trillion financial war chest that represents a massive tailwind for the economy.

Excess savings represent the extra money consumers have put away since the beginning of the pandemic, thanks to a combination of limited spending options, government financial support, and a run-up in home values and stock prices. It represents money on top of what consumers were on pace to accumulate assuming the pre-pandemic trend rate of saving.

“Excess savings currently total around 14% of a year’s spending, with almost all saved in bank accounts and other liquid assets,” Joseph Briggs, an economist for Goldman Sachs, observed in a research note on Sunday.

Among other things, this extra cash has enabled consumers to spend at a growing rate amid decades-high inflation.

And importantly, all income demographics have seen gains.

“We estimate that around 70% of excess savings are held by the top-two income quintiles, but lower-income households also hold a meaningful share, suggesting that spending from excess savings should help offset the declines in real income,” Briggs wrote.

This has generally been good news, especially for investors in companies that have successfully passed higher costs onto customers in the form of higher prices.

However, these savings are also exacerbating two of the biggest challenges in the economy.