August 13, 2020 9:22AM 

# The Last Federal “Stimulus” Didn’t Stimulate 

By [Alan Reynolds](https://www.cato.org/people/alan-reynolds) 

---

<a class="js-popover-trigger cursor-pointer popover-trigger" data-bs-placement="bottom" data-bs-trigger="click" id="popover-trigger"> 

SHARE 

</a> 

In a [recent piece at AIER](https://www.aier.org/article/what-did-the-stimulus-plan-stimulate/), 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](https://www.bea.gov/sites/default/files/2020-07/gdp2q20_adv_0.pdf), 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](/sites/cato.org/files/styles/pubs_2x/public/2020-08/image1-9-1.png?itok=xvBYnmcO) 

##### Related Tags 

[COVID-19](https://www.cato.org/covid-19), [Tax and Budget Policy](https://www.cato.org/tax-budget-policy) 

[![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) 
This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).