We continued to spend our little hearts out in June:
I did my part, in ways both large and small, and apparently all the rest of you did too. The June number for retail spending was once again about $60 billion higher than the pre-pandemic trend.
This is mostly thanks to the very generous (yes!) rescue packages that were passed, the first one almost immediately after the pandemic began and the final one in January. The result has been surprisingly limited economic pain and lots of personal savings, which are now being spent down. This should get us safely through the end of the year, by which time the economy should be in plenty good enough shape to stand on its own.
POSTSCRIPT: It's worth being clear about this. The US really did respond to the pandemic well in an economic sense, far better than most European countries. We have spent more than $5 trillion, a huge sum, and it prevented a vast amount of pain and suffering. Not all of it. Nothing could do that. But a lot.
We're all Keynesians now. (or should be)
The spending has really helped local economies too--but not everywhere equally. Shop locally if you can.
This certainly helps, but the next set of packages are still needed. Think of this as stabilizing the patients and doing the emergency surgeries as needed. We still have to treat the underlying conditions and get through rehab.
This is true. It is all the Democrat's doing. They pushed that first package through Congress and had Trump sign it before the GOP realized hat was going on. And then Biden won the election in time for a proper follow up.
We may have spent more money than other countries but could it be argued that we pretty much had to because our social services are already lower than European countries? Having to spend more to make up for it seems reasonable to me.
Are YOU arguing that? I use the same "could be" formulation but recently decided it's a weasel phrase. Either I argue it or ask the question directly. So. Did we have to spend more than the Euros because our safety net is worse?
Since our economy is in better shape than Europe's afaik, we did more than just catch up.
I can certainly argue for that. Comparisons are tricky due to the difference in social safety nets between countries. Fewer jobs were lost in Europe in 2020 (6.9% unemployment to 7.1%) compared to the U.S. (3.8% to 8.6% or higher). It seems that European governments tended to pay to have companies keep employees on while the U.S. let them be laid off for benefits/stimulus that the government itself had to pay for directly. The U.S.'s economy is more dynamic than Europe's is overall though, I'll agree, but that was true even before COVID. All I'm saying is that you can't judge off of one big number. If big spending numbers were all that mattered, we would have the best healthcare system in the world...
Sources:
https://www.pewresearch.org/fact-tank/2021/04/15/fewer-jobs-have-been-lost-in-the-eu-than-in-the-u-s-during-the-covid-19-downturn/
https://www.washingtonpost.com/world/europe/covid-unemployment-europe-furloughs/2020/10/10/5573fbee-026c-11eb-b92e-029676f9ebec_story.html
So, Mk I eyeballing if the chart suggests total area under the curve is now back on the trend line… are we there yet?-)
Yes. Had the same thought eyeballing it myself.
Which might imply if we got the amount of stimulus " right" to just offset loss of demand caused by the pandemic, then future months should drop right back to trendline. If not, then maybe the stimulus overshot and we hyped up demand too much, more than it would have been without the pandemic and the fear of inflation is warranted ( or we will now need a sharp recession to correct).
Of course, a perfect stimulus would have been one that managed to spread out the demand so the curve never changed at all, and supply was never affected too by things like extending unemployment. But I doubt it was realistically possible to do that. And just allowing consumers to eventually make up their lost demand later might have been the best we could do.
So maybe the past few months if data with both demand and maybe the resulting inflation does not tell us that much. Still consistent with either it was just the pent up demand financed by stimulus being finally spent ( and now just finished) and now both demand and hopefully inflation will start to subside. Or it will not and we are facing an inflationary cycle.
So maybe the next few months will now finally tell the story if have caught up on cumulative demand.
But … but I thought the solution to all economic problems was belt-tightening and Austerity. Otherwise Inflation Monster will come to EET US IN OUR BEDS!!
Obviously the only thing to do at this point is cut capital gains taxes. Because something something unleash our economy something investment something jaaaabz.
NY Times actually had a story out yesterday about how Japans difficulties raising inflation could be a warning to us as our population ages.
So that was nice to see a bit of a balance.
That is not a warning, but you need to adjust for the decline. If your population growth is nill, 1% inflation is pretty good.
I'd like to have good liberal/progressive people kick me around on this:
What is Up with this CHILD TAX CREDIT!?!
I have no problem with food stamps or other forms of food assistance, school lunches being paid for...but this free money as a reward for having probably too many children, a tax credit encouraging even more probably not adequately cared for children....
What are we thinking? This is insane to me (unless this is naked Democratic vote buying).
I don't understand and cannot get behind this program....someone tell me why I am wrong on this?
Alas, I've spoken to good and staunch other democrats and they agree with me...so I come here for someone to beat me up on this....
Thanks for the help
Best Wishes, Traveller
The facts from other countries say that the child tax credit makes life a bit more comfortable for children of poor parents without noticeably affecting the birth rate. Canada has had subsidies for children since 1945; since 1992 that subsidy has been similar to, but more generous than, Biden's child tax credit. Despite that, Canada's birth rate is lower than the US's.
Children have needs and wants other than food. Extra cash may enable the family to afford accommodation with bedrooms for the children, or to properly clothe the children, or maybe even, horror of horrors, to buy the children the occasional toy or comic book.
Nice response....something I did not know.
Best Wishes, Traveller
Wasn't expecting Robert E. Lee's horse to be so gracious.
The idea that people would cut back on having children because of lack of money is wrong, over the long term. Reproduction is the most fundamental urge of all organisms - and people are organisms. Enforcing poverty on people is not the way to limit US or world population.
Actually, it's the other way around. In general, and all over the world, more prosperous societies have lower birth rates. It's called "the demographic transition".
Another good point:
"Enforcing poverty on people is not the way to limit US or world population."
I suppose which is why I use the buzz words, free Abortion, free and available birth control...
I am trying to remove the negative instant connotations...
___________
As I think a bit more...I do and have done a substantial amount of custody work and I remain fairly certain that an overt, rational decision is what brings a lot of the children into this world.
A desire to reproduce, sure, but it is a lot more complex than this, I think
Best Wishes, Traveller
Damn, the above needs a correction
"I remain fairly certain that an overt, rational decision is NOT what brings a lot of the children into this world."
Thanks again, Traveller
There's also the facts that (1) a shockingly large percentage of US children live in poverty -- over 15%, 3rd highest in the OECD, and roughly 150% the adult poverty rate -- (2) that basic advantages enjoyed in childhood -- nutrition, medical care, consistent shelter, etc. -- have a huge downstream effect (as do their lack), and (3) it's estimated that these payments alone will reduce the childhood poverty rate in the US by up to half.
In other words, let's forget the theorizing from comfortable armchairs about incentives and messages and so on, and focus on the fact that this will materially improve millions of children's lives, not just now but in the long term.
Well, I don't mind being educated...I will probably copy and past for reference everything said here...I especially note this because I travel in democratic circles and these tax credit transfers have negatively been mentioned to me...
So now I have a response....though, to be completely honest, these direct payments seem off to me...but obviously I need to do a rethink.
Thanks again, Best Wishes to All, T
"Le mieux est le mortel ennemi du bien" -- Montesquieu
Yeah, but hasn't that been a standard business dictum for the last century or so? (Not that I expect US businessmen to have ever read French philosophy.)