August 13, 2020 9:22AM

The Last Federal “Stimulus” Didn’t Stimulate

In a recent piece at AIER, I argue that the last stimulus didn’t stimulate:

Mailing $1,200 checks to 159 million people, adding $600 to weekly unemployment benefits and rationing forgivable 1% loans for five years did, of course, raise personal income. Relatively small tax credits lifted after‐​tax (disposable) income slightly more. “Disposable personal income increased $1.53 trillion, or 42.1 percent, in the second quarter,” reports the Bureau of Economic Analysis (BEA). Yet contrary to stimulus promises, consumer demand fell even more than income increased: ‘Personal outlays decreased $1.57 trillion… The [34.6%] decrease in outlays was led by a decrease in PCE [personal consumption expenditures] for services.”

Income Rose; Spending Fell