Expect a Surge in Spending as Personal Income Jumps on Covid Stimulus Free Money
Personal Income Jumps 10% In January
The Bea's Personal Income and Outlays Report for January 2021 notes that personal income increased $1,954.7 billion (10.0 percent) in January.
Disposable personal income (DPI) increased $1,963.2 billion (11.4 percent) and personal consumption expenditures (PCE) increased $340.9 billion (2.4 percent).
Rise Due to Transfer Payments
The 10% jump in January is due to a jump in transfer payments, notably covid stimulus payments.
Transfer payments are free money or money equivalents from the Federal government.
The category includes food stamps, a relatively stable transfer payment, and Covid stimulus items (one time and ongoing).
There was a "one time" leap in March of 2020 and another "one time" jump in January of 2021. Democrats are angling for another "one time" jump, with some Republicans in agreement.
Personal Income and Outlays Detail
Personal Income minus Transfer Payments (Red Line) is about where it was before the Covid Pandemic hit.
Spending plunged (Light Green Line), then recovered on the first stimulus package.
PCTR Other (Yellow Line), shows another huge surge, mostly unwarranted because it was a shotgun payment to nearly everyone as opposed to being targeted to only those genuinely affected by Covid.
PCTR Other led to the jump in Personal Income (Blue Line). Another spending surge is highly likely.
Not Just Congress
It's not just Congress that is loose with money. On February 23, I commented The Fed Soothes the Market Today With More Easy Money Talk
Finally, please note Mitt Romney's accurate blast at Biden's stimulus plan. For details, please see Biden’s Stimulus Bill Is a $1.9 Trillion Clunker
Yes, the Democrats are angling for yet another round of "one time" stimulus free money for all.