Savings and its effect on the economy causing a recession

I remember growing up and of the first lesson learnt about money was save money. I was taught to save money as a child, save money as an adult and save for retiring. Saving is a way of keeping money for future goals and target, so why are we having problems with savings as adult. During this pandemic, a lot of people decided to withdraw their investments and their money from the banks to hold for savings purposes and suddenly, the economist say that people aren’t spending money and then it is a bad thing to hold money as holding or saving money leads to a financial crisis or recession. Why will something be taught as a good idea on individual level regarded as something bad for the economy?

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Since the beginning of the pandemic, the GDP of so many countries have fallen as a lot of households do not spend money in the country and only the government have been pumping money out. When the GDP of a country goes down for about 6 months then such country often declares a recession. When people aren’t spending money, the economy suffers and that s why a lot of government have been giving stimulus cheques.

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With a recession, people go out of work, investment crashes, companies go bankrupt and many more, which often leads to a panic which results to people saving money but instead of at the bank, they do this at home. Since people do not have security about their income, they go into one thing, savings. If savings really affects the economy, then the growth of the economy will be bad.

Savings is actually not a bad thing when some people are spending and others are saving but it becomes a thing of concern when the people are pulling out funds at once and holding on to cash out of fear and not spending, then this is bad and could lead to a recession.