Opposite Directions
The BEA’s Personal Income and Outlays report shows Real Personal Consumption Expenditures (PCE) rose 5.2% but Real Disposable Personal Income (DPI) decreased 1.8%.
Personal saving was $3.37 trillion in June and
the personal saving rate—personal saving as a percentage of disposable personal income—was 19.0%.
What’s Going On?
The answer is Economic Impact Payments.
The CARES Act of 2020 provided $300 billion in direct support economic impact payments to individuals, with advance tax rebate payments distributed mostly in April 2020.
A $1,200 refundable tax credit was provided to individuals ($2,400 for joint taxpayers) that meet specified criteria. In addition, qualified taxpayers with children receive $500 for each child. The amount of the rebate phases out at $75,000 for individual filers, $112,500 for heads of household, and $150,000 for joint taxpayers at 5 percent per dollar of qualified income. The rebate phases out entirely at $99,000 for single taxpayers with no children and $198,000 for joint taxpayers with no children. Tax returns for 2019 or 2018 will be used to calculate the advance payment to taxpayers, but taxpayers eligible for a larger rebate based on 2020 income will receive the increased amount in 2021 when taxes are filed during the 2020 tax filing season.
Taxpayers with higher incomes in 2020 will see any overpayment associated with their rebate forgiven.
Those $1,200 checks packed a wallop because they went out whether or not anyone was impacted.
In contrast, the $600 weekly checks more than made up for lost income for some people, but others lost income.
What’s Next?
That depends on Congress and President Trump, assuming Trump would sign any bill Congress passed.
Bickering could last weeks. Meanwhile, benefits expired.
Clock Runs Out
As noted on Sunday, the Clock Just Ran Out on $600 in Weekly Unemployment Benefits.
Cynical Tweet Discussion Regarding the Clock
“So Far Apart on Covid Deal That We Really Don’t Care”
On Wednesday Trump proclaimed “So Far Apart on Covid Deal That We Really Don’t Care”
Congress Left Town Without a Coronavirus Stimulus Deal
On Friday, Congress Left Town Without a Coronavirus Stimulus Deal.
In dueling press conferences, White House Chief of Staff Mark Meadows laid into Democrats for rejecting a short-term deal to continue the bolstered unemployment benefit for one week, while House Speaker Nancy Pelosi railed against Republicans and the Trump administration for attempting to take a piecemeal approach to helping Americans as COVID-19 cases continue to surge nationally.
Republicans Propose $1,000 Stimulus Checks
On Thursday a group of Republican Senators Proposed $1,000 Stimulus Checks.
In order to qualify, both adults and dependents would need valid Social Security numbers. Under the bill, a qualifying family of four could potentially receive $4,000 — $600 more than they received in the CARES Act.
The payments would be more generous than the first checks, according to the Tax Foundation — $1,584 on average versus $1,523 on average in the first round.
The thresholds at which the checks would phase out would be slightly lower than the first round, according to the Tax Foundation. Individuals with income above $95,000 would not receive payments, rather than the $99,000 cut off in the CARES Act. Those who are married and filing jointly would not receive checks for income over $190,000, down from $198,000 in the first round.
Trump Blames Pelosi and China
Economically, I fail to see the merit in sending $1,000 checks to those not impacted.
I suppose Republicans figure that free money for those not impacted benefits them more than the Democrats.
In regards to the rest of their proposal, it does make sense that people should not make more being unemployed than employed.
The problem is that it could take weeks or longer for states to program that idea. Meanwhile benefits have already run out.
Philosophically Speaking
Philosophically, people should not make more being unemployed than employed.
Politically speaking, the Republicans just stepped on a landmine.
The irony in the bickering is that the economy would do better (and therefore Trump’s reelection chances) the greater the stimulus.
They are fighting their own best interests for the sake of budget principles they never adhered to before.
Mish
Most Americans don’t need help. They are flush. That’s what most people in this board refuse to acknowledge.
GOP is doing the right thing.
They are flush because they have Covid.
On what planet are you living?
If you do not understand, then perhaps you do not understand the Constitution. The government’s duty under the Constitution is to ensure the “General Welfare”. The General Welfare is the Welfare of “all the people” inclusivly, not some of the people. To give taxpayer dollars to one group and exclude others is not in keeping with the text and the law of the Constitution. It is not the place of the government to decide who is deserving and who is not. We do not have a tyranny, where the opinion of one or some outweigh the opinions of others about who is deserving. Considering the fact that those in higher income brackets pay the majority of the taxes from which these payments are paid for, it is not reasonable to expect them to not benefit from what they are financing. If you are going to give an equal share to shitbums who do nothing to support the country, then the people who do are supporting the country certainly deserving of their fair share.
I thought that “seasonal adjustments” were suppose to keep those lines in sync.
Someone at the BEA is not doing their job.
“Bickering could last weeks. Meanwhile, benefits expired.”
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Stalling could weaken Democrats hand. GDPNow latest had Q3 growth at +11.9%. If that trend continues … won’t a mere $trillion be enough ?? …
The NYC region and Greater Boston Eastern Massachusetts regions will lead the recovery just like they lead the record 12 year economic boom with more jobs, housing being built than anytime in history
Where you been?!?!
I remember you and how everything wonderful in Boston.
everything is and has been for the last 11 years. The NYC region and greater Boston (both very “blue” areas) have led the USA in job and economic growth. I always wonder how these fresh faced 18-24 year olds that everyone and their mother whines about “how bad they have it due to ‘student debt” are able to buy $1399 phones, thousand dollar Canada Goose coats in the winter, hang out at Jones Beach or on the Cape during the summer and of course drive late model SUV or CUVS (that now are priced at $25,000 and up).
Supposedly the Unemployment rate in Massachusetts and in NYC are in double digits but I don’t see it especially compared to the last “real recession” which was in the early 1990s
I agree. This is the #BestRecessionEver. Many people are getting a boost in income.
Chip sales lead the economy and it’s booming. People are flush with cash.
“everything is and has been for the last 11 years. The NYC region and greater Boston (both very “blue” areas) have led the USA in job and economic growth.”
If The Fed handed everyone else trillions stolen from people in NYC, as opposed to the exact opposite, things would be exactly the reverse.
That’s the problem with a country of nothing left but pure, simple, crass theft: While the guys who are handed the loot, can certainly be handed enough unearned loot to appear to be “doing well”; those robbed to fund them, will inevitably do not-so.
As for Boston, it’s like the Bay Area. Not quite New York wrt being a destination for wealth stolen from America’s dwindling number of productive people, but still a major net recipient. From VC’s to “Asset Managers” to “legal” nonsense, to the “real estate” sector to “stock options”…….. All pumped up with funds stolen from those who had to earn it.
After all, as always, when a successful robbery is committed, it does result in those robbed getting poorer, while those handed the loot getting richer….
Politicians have figured out that borrowing money and spending it / giving it away is a great way to buy votes. With the expiration of Federal sponsored additional unemployment benefits, how do the Republicans and Trump benefit? Who is paying them NOT to hand out money?
The simplest answer is that Republicans want even more concessions from Democrats. This is partisan politics at their worst since it puts voters last.
A more practical answer is the Federal Government realizes borrowing on behalf of states and muni’s would collapse the US Dollar’s hegemony if the US government defaulted. Long term, states/muni’s would be better off because they would have credit cards with no balance. The wealthy would still have their wealth because they own bonds, which would help them retain their ownership of companies as old shareholders are replaced with bondholders who exchanged defaults to shares. Everyone else will take relatively large losses. But achieving that goal can’t be made obvious. The middle class will be very upset about having their 401K retirement plans getting wiped out.
“Politicians have figured out that borrowing money and spending it / giving it away is a great way to buy votes.”
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Yeah, an old trick. But the party might be ending (for now). This yesterday … I don’t believe in coincidences.
(Bloomberg) — One of the world’s major credit-rating companies fired a warning shot regarding the U.S.’s worsening public finances on Friday, just as lawmakers in Washington contemplate spending more to combat the economic fallout from the coronavirus pandemic.
Fitch Ratings revised its outlook on the country’s credit score to negative from stable, citing a “deterioration in the U.S. public finances and the absence of a credible fiscal consolidation plan.” The country’s ranking remains AAA.
“Income and Spending are Headed in Opposite Directions”
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heh, you are about 20 years late.
Income here includes government handouts. The REAL issue is the steady degradation of Wage & Salary / GDP. Globalization has allowed the top 20% to get ever richer by playing global wage arbitrage. The bottom 80% never had any leverage. Take what they could or risk losing job to offshoring.
Do you really need a high income these days to have the latest iPhone and sleeve tattoos as I see that Gen Z and millenials get a hard on for???
I mean how exactly does a Target employee for example getting paid $15 an hour afford the latest IPhone, sleeve tattoos and of course a late model SUV or CUV when you have extensive bus and subway service in NYC outside of Manhattan. By the way a one bedroom apartment anywhere in the NYC Metropolitan area is $2000 a month at least in rent and a covered garage space another $270 plus the city charges 10.875% parking tax on top of that in addition to the 8.875% sales tax
“Do you really need a high income these days to have the latest iPhone”
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Not with leasing.
Anyways, for many the latest gadget is a status symbol. My generation it was a new vehicle … parked in front of a shack (still see that). The younger generations don’t care that much about driving (too expensive and rather spend time on line) and its more about “experiences” rather than material goods.
I own the Samsung s20 5G phone which cost $1399 (plus tax) at the Tmobile store. Did not qualify for Jump on Demand so my father got it for me on his line (he is using the ancient Samsung Note 10 phone which I used before so we just switched sim cards). anyway the phone cost $58 a month (plus tax of course) for 24 months and another $80 was spent on screen protector and otter box case. Why would someone run out and buy the latest and greatest Iphone now when it doesn’t have 5g??
Supposedly the unemployment rates in Massachusetts and in the NYC metro area are in the double digits but you wouldn’t know it by the lines waiting to get into stores, all the newer cars on the road, construction cranes everywhere..
{{{{The younger generations don’t care that much about driving (too expensive and rather spend time on line) and its more about “experiences” rather than material goods.}}} so people who have cars in Boston or NYC (along with paying insurance each month) care more about experiences?? I mean ‘our generation'( I assume you mean Gen X) had no problem driving a paid off reliable 10 year old Toyota Corolla. Now the “status symbol” for millennials seem to be Jeep Cherokees which cost $50,000 + out the door
Don’t base everything by your experiences in Boston and New York.
The DC to Boston corridor about the most affluent in the country.
Try Deep South or Flyover for another perspective.
Highway robbery. This is just pure money transfer to the tech sector.
The direct reply to article window is gone on my browser in Android so I’m commenting here. Also dm field in options tab is gone, also froze page if set cookies to all off on popup. No login button either.
My comment is on serology testing though, and what it signifies. In Spain unreported low/no symptom cases were found to be high by serology survey, I forget the %, and now in Portugal they released a similar survey (in Portuguese)
which estimates only 15% of cases are registered. The serology tests are known to be not as accurate as PCR, the parameters of certainty are included in that study I think. Like Spain the media barely mentions the 15%, instead it focuses on that immunity in the population as a whole is still low at under 5 % .
So two questions.
Firstly how much of case change is due to testing. The numbers government reports could be taken as relatively reliable indicator if it were just symptomatic cases, because that would ignore background low/no symptom cases. On the other hand change in testing protocol could just pick up the background low/no symptom cases and give impression of surge. We should have this detail and data presented to us, but we don’t.
Secondly, as a mayor in Spain exclaimed, with so many asymptomatic cases controlling an epidemic is near impossible.
“Economically, I fail to see the merit in sending $1,000 checks to those not impacted.”
If you don’t, more and more people will arrange to be “impacted” every day.
The only way to minimize economic distortions, assuming you absolutely have to provide a government safety net, is to hand the money out indiscriminately. Same amount to everyone. From homeless dopeheads to Trump and Bezos to some guy on sitting death row for genocide.
If you pay people specifically because they are unemployed, people will find a way to become unemployed. Or at least try less hard to no longer be. Ditto disability and all the rest.
And that’s just the immediate, first order, effect. On top of that, comes all the politicking, favor buying, lobbying, ambulance chasing, pitting “them” against “us” etc.; which inevitably results from empowering a gaggle of privileged hacks to arbitrarily “deem,” “find,” “decide” and “vote on” who “deserves”, “meets criteria” blah, blah, blah.
Pure vote buying.
I am voting against every incumbent come Nov unless they show that they did not support the CV19 response in their area.
“On top of that, comes all the politicking, favor buying, lobbying, ambulance chasing, pitting “them” against “us” etc.; which inevitably results from empowering a gaggle of privileged hacks to arbitrarily “deem,” “find,” “decide” and “vote on” who “deserves”, “meets criteria” blah, blah, blah.”
We’re doomed! Kuntsler says martial law this fall.
He’s been wrong for so long it’s not funny anymore. He said people on the bottom will be pissed if the stock market does not crash. What a joke. People on the bottom are having a party. They don’t care about the stock market.
Tokidoki,
He does push a narrative – the future will be all about “being local,” ‘helping your neighbor,” and pre-modern technology — but he seems best when he’s frantic. I hope he’s wrong! He is compelling and a master of prose.
He’s just being nostalgic. However, the current population is mostly infantile children with an elevated sense of entitlement.