American households were hoarding large amounts of cash on Tuesday amid economic uncertainties such as health events and the US election.

According to the latest research by Morgan Stanley economist Ellen Zentner, American consumers saved a staggering $12.5 trillion from April to July.

Zentner says the phenomenon of saving money is reflected throughout the income group. This is different from the situation in which relatively well-off families save cash in difficult economic times and low-income families are forced to spend more because of unemployment.

The question now is whether and when these families will start spending the money. In the absence of a new round of fiscal stimulus, there are most signs that consumers are cutting back on spending before the holidays, as they hoarded household items and bought home and office supplies at the height of the health incident in March.

The commerce department reported earlier this month that retail sales rose 0.6 per cent in august, slightly below expectations of 0.7 per cent and below the 0.9 per cent growth rate revised down in July.

Meanwhile, retailers Target Corp, WMT.US and M.US have warned that sales will slow in September as US households are cautious about buying back-to-school products this quarter.