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The chart on low income spending is fascinating. The stimulus payments yielded increased customer spending in the low-income demographic whereas the relatively

by lumost 6y ago

The chart on low income spending is fascinating. The stimulus payments yielded increased customer spending in the low-income demographic whereas the relatively unaffected high-income demographic has reduced spending by nearly 10%. This seems like the first large-scale data conclusively showing that increasing income at the bottom of the payscale will stimulate the economy more than on the top of the payscale. ( A semi-obvious conclusion, but one that hasn't been proven in data before, or embraced by US govt policy ).

remote_phone 6y ago
I disagree. It looks more like if you ensure that medium to high income earners have stable employment, the economy is more or less okay. By all indications the economy is doing much better than anyone would have thought and that’s on the backs of the medium and high end. The low wage earners spend their money on things that don’t move the needle for the economy otherwise it would have taken a bigger impact.
- lumost 6y ago
  Net consumer spending is still down ~4%. In the long-run if high income individuals could simply stop spending ~10% of their income - its quite likely that they are not spending the 10% on things that move the needle.
  - noirbot 6y ago
    If anything, this somewhat refutes the GP's point. Giving money to low-income people and increasing their spending didn't make up for the larger decrease in high-income spending. This is not to say that we shouldn't support low-income people, that's important as a moral and civil matter, but the economy at large, by volume, includes a lot of things that mostly high-income people spend on, and those things often employ a lot of people.
deeeeplearning 6y ago
>This seems like the first large-scale data conclusively showing that increasing income at the bottom of the payscale will stimulate the economy more than on the top of the payscale. This is wrong, velocity of money has been understood for a long time
noirbot 6y ago
I'm not sure that's true in whole though. I think it's more that the wealthy are more hit by the sort of things you can't do right now. I know I'm saving money by not taking much/any vacation this year, since flying is unsafe, and there's less to do on a trip since things are closed. The wealthy have more leisure and discretionary expenses that they can no longer spend on safely, or choose not to because even if they don't NEED to save money right now, they may feel like they should. For people in the low income bracket, a small increase in income will necessarily cause more spending because there's likely many things they've been putting off buying/doing. Finally, it's worth noting that percentile changes isn't really apples to oranges here. The folks who were in the high-income bracket were probably spending much more beforehand, so if you're just looking to cause more cashflow in the economy at large, it's not clear that having low-income people spending a bit more would get you as much spending in total as if you did something to cause the high-income group to spend more. And that's before you consider what sectors that spending is in. The businesses that most need stimulus right now seem to me to be the sort that high-income people are more likely to spend on (local small businesses, entertainment, travel). Your local grocery store or chain fast food is probably doing fine, relatively.

by lumost 6y ago

remote_phone 6y ago

I disagree. It looks more like if you ensure that medium to high income earners have stable employment, the economy is more or less okay. By all indications the economy is doing much better than anyone would have thought and that’s on the backs of the medium and high end. The low wage earners spend their money on things that don’t move the needle for the economy otherwise it would have taken a bigger impact.

lumost 6y ago
Net consumer spending is still down ~4%. In the long-run if high income individuals could simply stop spending ~10% of their income - its quite likely that they are not spending the 10% on things that move the needle.
- noirbot 6y ago
  If anything, this somewhat refutes the GP's point. Giving money to low-income people and increasing their spending didn't make up for the larger decrease in high-income spending. This is not to say that we shouldn't support low-income people, that's important as a moral and civil matter, but the economy at large, by volume, includes a lot of things that mostly high-income people spend on, and those things often employ a lot of people.

deeeeplearning 6y ago

>This seems like the first large-scale data conclusively showing that increasing income at the bottom of the payscale will stimulate the economy more than on the top of the payscale. This is wrong, velocity of money has been understood for a long time

noirbot 6y ago

I'm not sure that's true in whole though. I think it's more that the wealthy are more hit by the sort of things you can't do right now. I know I'm saving money by not taking much/any vacation this year, since flying is unsafe, and there's less to do on a trip since things are closed. The wealthy have more leisure and discretionary expenses that they can no longer spend on safely, or choose not to because even if they don't NEED to save money right now, they may feel like they should. For people in the low income bracket, a small increase in income will necessarily cause more spending because there's likely many things they've been putting off buying/doing. Finally, it's worth noting that percentile changes isn't really apples to oranges here. The folks who were in the high-income bracket were probably spending much more beforehand, so if you're just looking to cause more cashflow in the economy at large, it's not clear that having low-income people spending a bit more would get you as much spending in total as if you did something to cause the high-income group to spend more. And that's before you consider what sectors that spending is in. The businesses that most need stimulus right now seem to me to be the sort that high-income people are more likely to spend on (local small businesses, entertainment, travel). Your local grocery store or chain fast food is probably doing fine, relatively.