Stimmy! And Leon, The ‘Fully Invested Bear’

Stimmy! And Leon, The ‘Fully Invested Bear’

Did you get your “stimmy?”

Some folks sure did. Personal incomes rose 21.1% in March, the most ever, after a 7% slump in February (figure below).

The monumental jump was, of course, expected. Consensus was looking for a 20.2% rise. The range, from more than five-dozen economists, was 10% to 22.5%.

“The increase in personal income in March largely reflected an increase in government social benefits,” the BEA said Friday.

Personal spending rose 4.2%, essentially in-line.

The numbers weren’t really incremental given the market already had the first read on Q1 GDP, but they did underscore the effect of fiscal largesse.

The figure (above) is even more poignant in 2021 than it was in and around the benefits associated with the CARES Act. The large increases in January and March show the rather dramatic effect of stimulus, while the slump in February is perhaps a reminder that the world’s largest economy still needs training wheels after last year’s collapse.

A look at the “Other” category in the personal income and outlays data drives home the point (below).

That’s pretty dramatic. The personal saving rate (as a percentage of disposable income) was 27.6%, the highest since April of 2020, when Congress and Steve Mnuchin were rushing to provide the entire nation with “bridge liquidity” (as Steve famously put it) amid one of the most harrowing episodes in modern US history.

Apropos (or not, depending on whether you’re aware of his history vis-à-vis maligning redistributive policies on national television), Leon Cooperman told CNBC Friday that the current policy conjuncture “is not going to end well.”

But, being a billionaire, he wants to squeeze it for every penny it’s worth. He described himself as “a fully invested bear.”

“I think we should recognize we’re pulling demand forward and that the longer-term outlook is not particularly favorable, in my view,” Cooperman said.

He’s right. Things probably aren’t looking “particularly favorable” from his vantage point. Because he’s going to be paying more in taxes, “in my view.”


One thought on “Stimmy! And Leon, The ‘Fully Invested Bear’

  1. It will be interesting to see if a higher capital gain tax actually generates more tax revenue.
    It might result in “not selling” behavior.
    Having spent part of my career as a tax accountant- I have no doubt that loopholes regarding estate tax, carried interest and step-up upon death will remain for those who can afford to hire the necessary army of tax accountants and lawyers.

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