Americans Still Running on Fumes of Stimulus, Now Vanishing
The comments below are an edited and abridged synopsis of an article by Wolf Richter
For Americans, personal income from all sources—stimulus, unemployment, wages and salaries, Social Security, rental income, dividend income, etc., but not stock market gains—spiked in April and has been dropping ever since.
But those stimulus payments are ending. While unemployment benefits expired in July, actual payments dragged into August. Some of these payments were lump sum, covering many weeks, and the replacement $300-a-week started arriving mostly in September.
In the US, personal income from all sources in August fell by 2.7% from July to a seasonally adjusted annual rate of $19.5 trillion. This was still up 2% from February, but down 7.4% from the eerie stimulus spike in April.
Richter discusses personal income from all sources; income from unemployment benefits; personal income from wages and salaries; personal income from other sources; and how consumers still splurged on goods but scrimped on services.
He ends with a section on the stimulus-fueled pandemic economy: Stimulus payments and extra unemployment benefits drove spending among Americans who spend almost everything they take in and carry credit card balances.
Some of this money was used for credit cards, and some is in bank accounts, and so the power of the stimulus money will continue to add to consumer spending, but in decreasing increments until it has vanished.
Spending has shifted from businesses and educational institutions to households because of working and learning at home, thus deducting from business spending and adding to consumer spending, though consumers likely pay higher prices than businesses pay their suppliers. And by spending record amounts on goods, particularly durable goods, many of which are imported, consumers are sending part of their stimulus and unemployment money to manufacturers in other countries. But the costs of imports are a negative for the economy and are deducted from the US GDP calculations