Here’s What Stimulus Did For Incomes In January

Here’s What Stimulus Did For Incomes In January

Given the backdrop, it was doubtful that market participants were inclined to read too much (if anything) into Friday's data out of the US, but for whatever it's worth, personal income and spending in January were essentially in line. Spending rose 2.4% versus expectations of 2.5%. This comes on the heels of a blockbuster retail sales print, which many attributed to stimulus payments. Some said that presaged a dramatic (and inflationary) upswing in spending once Joe Biden's relief plan is injec
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One thought on “Here’s What Stimulus Did For Incomes In January

  1. Larry Summers is very smart obviously. But I believe he misses the bigger picture. Most of this government spending/tax cutting now is just to keep things from falling apart. That is a lot different than stimulus in my book. As soon as the prop of government spending is removed, we would go right into the sink- unless of course the virus is brought under control. It is extremely easy to slow things down if that happens. The Fed can raise short term rates, cut Q/E and BIden and Congress can raise taxes on corporations, and higher income cohorts in the country. Also the aid to state and local government is probably a one shot- unless of course we get in a downward spiral with the virus. Anyway spending on that and extended and widened unemployment insurance would be wound down. We are on course in this country to rebalance after 40 years of starving public non-defense goods. Will that lead to lower private consumption- perhaps at the margin. But a later infrastructure bill would probably be additive to demand and consumption, and is long overdue. No, Biden and the administration are on the right track.

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