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.
Free Money
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
Also note that Powell Disses Inflation and Ignores Questions From Congress About Leverage
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.
Mish
Payments are temporary. Like most attempts at manipulation, politics may start a surge in transactions but when the money dries out…then what? Are they going to burn through savings???
JEEZ ! Your exceptional nation really IS throwing (printed) money down the crapper, ain’t it ? Might even ve send you a couple of bucks more if puppet Joe had refrained from picking up and complying with the Obama Syria bombing administration ! The US is BACK indeed, its obsolete and by now unjustified reserve currency status allowing it to indulge into outright INSANE but nevertheless desperate giveaway policy…. Unless of course you think that bombing capacity is ALL it takes !
One thing Biden and Trump have in common is they both believe in unlimited spending.
YES BUT ….there ain’t nougt like ‘politically correct’ spending, is there ?
Fauci never changed the goalposts. In your world economists change their forecasts all the time when data changes. Fauci is saying the same thing. I’m sure you have changed a forecast at least once in your blog purely based on the data changing. That is what scientific people do. If you call that Fauci changing the goalposts then so have you.
Hi Mish, I just wanted to stay I read your blog from time to time since exactly 2005 mate. Actually a lot of what you write makes a lot of sense in the sense that your explanations are usually very simple, logical, consistent, sometimes audaciously different. I do not like when you talk about politics for sure (you are an extreme libertarian and I like moderation or mixes…) but I respect your opinion. To me it is obvious you are very bright individual (coming from a 40 yo math uni professor so I think I qualify as a bright individual lol). In 2005, I remember your articles about Californian real estate that was gold. There was no other bear I was aware of back then… cheers.
It wouldn’t matter if Mish did go to medical school. Doctors and scientists that have not been parroting the official narrative have been smeared, no matter what their credentials.
Banking expert: “You will never see another financial crisis in your lifetime.” -Janet Yellen, spring 2018
“I do worry that we could have another financial crisis.” -Janet Yellen, fall 2018
This expert is now Secretary of the Treasury.
I didn’t know economics was a science.
Economics is a science the same way reading goat entrails is a science. Or the same way running a gangster racket is a science.
In case you aren’t smart enough to figure this out, it means science matters.
“In case you aren’t smart enough to figure this out, it means science matters.”
Narrative matters.
From the CDCs own website:
“In our systematic review, we identified 10 RCTs that reported estimates of the effectiveness of face masks in reducing laboratory-confirmed influenza
virus infections in the community from literature published during 1946–July 27, 2018. In pooled analysis, we found no significant reduction in influenza
transmission with the use of face masks (RR 0.78, 95% CI 0.51–1.20; I2 = 30%, p = 0.25)”
“Masks are better than vaccines”; Stated in sworn testimony by Dr. Redfield, the CDC’s Director in September 2020
Narrative over science.
when do I get my check??
Putting on foil hat….is it coincidence that right as stimulus is approved, after commodities surge to an extreme, and suddenly at just the right time T’s sell off?
“Yes, the Democrats are angling for yet another round of “one time” stimulus free money for all. “
Not exactly for all. Specifically 20% of single people make more than the $75k where this begins to phase out; only roughly 8% of married couples make more than the $150k where this begins to phase out.
Of course, as all the previous stimulus checks, they are highly discriminatory against single professionals. They phase out individually at $100k (or $87k on the last one) which is not at all rich in most cities—but for married folks (w/o kids), it is $200k. The cost of living for a couple is certainly not twice that of a single…more like 1.4x approximately since the cost of mortgage/rent, many utilities, etc is only marginally higher. And for those with kids, they hit the jackpot no matter what the salary. No means testing whatsoever for these people (they can have $10M in assets & $500k salary but we still issue a check for the kids).
As a single professional, I’m already paying the highest marginal tax rate per dollar of income of any group; I also pay plenty of property taxes, sales taxes, etc to support their kids in the schools/free lunches, the elderly, the disabled, etc. I only hope when I’m in one of those situations someday that the free money gusher is aimed towards me and I become one of these protected classes.
Hmmm…..my own take is it isn’t that the goalposts have moved, but that they are wrong…. I do agree we are all always learning and unlearning, so there is hope.
He knew the answer to his “ad hominem” sideswipe when he asked it.
Nor did I get a degree or study economics, airplanes, finance, or almost any topic I write about.
For the record, my degree was in Environmental Engineering. That did not stop me from being one of the best mainframe computer consultants in the country (my opinion).
Nor did it stop me from then developing one of the most widely read economic blogs in the world (statement of fact).
Lacy Hunt, manager of one of the largest bond funds in the world, once commented that he had to unlearn everything he learned in school about economics.
When someone asked Lacy about me, and he has confirmed this story I heard third-hand, Lacy commented that I was a damn fine “economist”. I would not make that same claim. I am not an economist. Rather, Lacy simply meant to give me a compliment that I do appreciate.
Unlike him, I did not have to unlearn mountains of Keynesian claptrap.
Mish
We hired people from the hard sciences specifically because they didn’t have to unlearn economics.
Exactly. I haven’t seen any internet bloggers become practicing medical doctors or epidemiologists.
I have learned from reading your stuff….for a long time….since 2012 for sure, maybe before that. I’ve always found that you make excellent arguments for whatever point you’re trying to make. Obviously I sometimes disagree with you, but I’ve never found you to be anything but a lucid and informative source…..who often makes me have to stop and think…..and reconsider my own biases.
I think understanding wise investing is very important. I consider it the ticket to a better life, for people who start near the bottom, as I did. It’s a game and I like to see people win.
For years I’ve wanted to write a book about it…..I probably won’t ever get it done….but I like to get schooled by my betters when I can. It’s how I learn. I come here primarily to learn.
And….understanding investments starts with understanding money and economics….I remember when I first read you on inflation…it completely changed the way I was looking at it.
I like forums like this one because it attracts lots of smart people from various fields who share these common interests…I know many people in the financial services world show up here….including very successful retired execs….who often drop great comments..people I would NEVER get to know in the real world.
Anyway, thanks for what you do here and thanks for putting up with my OT comments. I just enjoy discussing markets and making armchair prognostications. I don’t claim expertise…but I love to study this stuff and talk about it. My goal is to make the existing system work for me…instead of beating my head against it..and I would like to think maybe every once in a while I share something somebody else can use to become more financially free.
I
You can become a lot of things without an education but you can’t put M.D. after your name unless you went to medical school. Stop comparing dumb fields like economics to medical science.
Sorry Eddie. This was for Mish.
You can become a lot of things without an education but you can’t put M.D. after your name unless you went to medical school. Stop comparing dumb fields like economics to medical science.
Your posts work for most fields but they don’t work virology, epidemiology, and other medicine where you actually need to go to school for a long time to know what you are doing and practicing. I use to think like you until I married a doctor and saw their lives firsthand, Some of your posts on pandemic are no better than what a Trump supporter uses for science.
I’m affected by COVID, and I got my last check in June 2020. I am now making payments on the EIDL, so I have more going out the door, not more coming in.
I applied twice for the 2nd PPP. I got the first one in some weeks back….and have heard nothing, so I applied again this week when Biden changed the goalposts again for that. Hopefully one of them gets processed….
I’m not worried by these transfer payments, I think they probably do more good than harm in a pandemic. Spending will go up….it should go up.
I am noticing that the people I call my patients….since the freeze last week, are not spending….at least not with me. I think they’re pretty tapped out.I hope they all get another check.
Please point to what goalposts I have moved. I would like to know.
When did I give a timeline on gold, on a stock market crash, or on a currency crisis? If I did it was a mistake, and likely years ago.
And unlike Fauci, I do not believe you can find me changing my tune on any of that as time progressed. So, where is my moving goalpost?
If you cannot provide evidence of the above, then I expect an apology.