5 ms·

I think it’s naive to say that a couple stimulus checks and some unemployment is responsible for high consumer spending.

mxschumacher 5y ago
>>> a couple stimulus checks You might want to take at the numbers involved (this is just the US, other countries also had huge packages): https://en.wikipedia.org/wiki/American_Rescue_Plan_Act_of_2021 https://en.wikipedia.org/wiki/American_Rescue_Plan_Act_of_20... https://en.wikipedia.org/wiki/CARES_Act https://en.wikipedia.org/wiki/CARES_Act
- zeckalpha 5y ago
  About 10k per person?
  - TedDoesntTalk 5y ago
    Don’t forget the two rounds of PPP grants to businesses. They were called loans but they are grants because they do not need to be repaid in most cases.
mdm12 5y ago
Not only that, but people were stuck in their houses all day. It's not surprising at all that people ordered tons of crap on Amazon or decided their house needed some renovation/appliances/etc.
- throw0101a 5y ago
  > It's not surprising at all that people ordered tons of crap on Amazon or decided their house needed some renovation/appliances/etc. As any graph comparing CPI-Goods versus CPI-Services will show: * https://ritholtz.com/2021/11/structural-or-transitory/ https://ritholtz.com/2021/11/structural-or-transitory/ Further, Goods YoY inflation has been flat/negative since 2013, so most supply chains probably weren't really being stressed much (and maybe even atrophying slowly) when the sudden surge in demand hit.
  - mitjam 5y ago
    I think there are quite a few structural changes that might keep inflation alive for longer: climate change and political measures to mitigate them result eg in higher energy and housing costs, globalization seem to have peaked, second round effects like wage increases already appear. Inflation may well got kick started last year.
drexlspivey 5y ago
I think it's naive to say that 6 TRILLION dollars of stimulus and a sharp rise in inflation that followed it is unrelated
- geofft 5y ago
  But most of that stimulus didn't end up in the hands of consumers. People weren't purchasing Pelotons with $600 stimulus checks. The sort of person who has nothing better to spend an extra $600 on than a Peloton is the sort of person who wasn't eligible for the stimulus in the first place. (I do fully agree that stay-at-home orders motivated some purchases, though - but again, the sort of people who could actually stay at home and take meetings from their home office instead of driving around town delivering Pelotons were the sort of people who already had the cash to spare for these things, anyway.) That stimulus ended up in the hands of business owners, which effectively caused a partition: because business owners, as a group, had more money, they could all raise prices and afford it. But the working class, as a group, did not have noticeably more money. In other words, there was a sharp rise in inflation - for the owning class. The effect was the same as if there were two neighboring countries, and one experiences inflation. That country's cost of living goes up, but so do their wages and the valuations of the things they own. So they're fine, and effectively they can buy things from the second country for even cheaper in terms of purchasing power. But people in the other country find it harder to afford to buy things from the first country. They're the ones most hurt by inflation.
  - simonh 5y ago
    Your example only works if both countries use the same currency. If they don't the country suffering inflation will have a devalued currency, so their buying power relative to the other country will have collapsed.
  - throw-7462637 5y ago
    > People weren't purchasing Pelotons with $600 stimulus checks. Anecdotally, they totally were. In my immediate friends group, families that were eligible for stimulus (making around $120K/yr) spent it on luxury items including photo cameras and as a downpayment for new cars. I don't know anyone who bought a peloton but extrapolating what I saw in my circle, it's totally believable.
callmeal 5y ago
>I think it’s naive to say that a couple stimulus checks and some unemployment is responsible for high consumer spending. It is naive - because people go off the outrage posts and ignore reality. Stimulus checks were disbursed between March 2020 and March 2021 - it's been almost a year since the last stimulus and people are still harping on it.

mxschumacher 5y ago

>>> a couple stimulus checks You might want to take at the numbers involved (this is just the US, other countries also had huge packages): https://en.wikipedia.org/wiki/American_Rescue_Plan_Act_of_2021 https://en.wikipedia.org/wiki/American_Rescue_Plan_Act_of_20... https://en.wikipedia.org/wiki/CARES_Act https://en.wikipedia.org/wiki/CARES_Act

zeckalpha 5y ago
About 10k per person?
- TedDoesntTalk 5y ago
  Don’t forget the two rounds of PPP grants to businesses. They were called loans but they are grants because they do not need to be repaid in most cases.

mdm12 5y ago

Not only that, but people were stuck in their houses all day. It's not surprising at all that people ordered tons of crap on Amazon or decided their house needed some renovation/appliances/etc.

throw0101a 5y ago
> It's not surprising at all that people ordered tons of crap on Amazon or decided their house needed some renovation/appliances/etc. As any graph comparing CPI-Goods versus CPI-Services will show: * https://ritholtz.com/2021/11/structural-or-transitory/ https://ritholtz.com/2021/11/structural-or-transitory/ Further, Goods YoY inflation has been flat/negative since 2013, so most supply chains probably weren't really being stressed much (and maybe even atrophying slowly) when the sudden surge in demand hit.
- mitjam 5y ago
  I think there are quite a few structural changes that might keep inflation alive for longer: climate change and political measures to mitigate them result eg in higher energy and housing costs, globalization seem to have peaked, second round effects like wage increases already appear. Inflation may well got kick started last year.

drexlspivey 5y ago

I think it's naive to say that 6 TRILLION dollars of stimulus and a sharp rise in inflation that followed it is unrelated

geofft 5y ago
But most of that stimulus didn't end up in the hands of consumers. People weren't purchasing Pelotons with $600 stimulus checks. The sort of person who has nothing better to spend an extra $600 on than a Peloton is the sort of person who wasn't eligible for the stimulus in the first place. (I do fully agree that stay-at-home orders motivated some purchases, though - but again, the sort of people who could actually stay at home and take meetings from their home office instead of driving around town delivering Pelotons were the sort of people who already had the cash to spare for these things, anyway.) That stimulus ended up in the hands of business owners, which effectively caused a partition: because business owners, as a group, had more money, they could all raise prices and afford it. But the working class, as a group, did not have noticeably more money. In other words, there was a sharp rise in inflation - for the owning class. The effect was the same as if there were two neighboring countries, and one experiences inflation. That country's cost of living goes up, but so do their wages and the valuations of the things they own. So they're fine, and effectively they can buy things from the second country for even cheaper in terms of purchasing power. But people in the other country find it harder to afford to buy things from the first country. They're the ones most hurt by inflation.
- simonh 5y ago
  Your example only works if both countries use the same currency. If they don't the country suffering inflation will have a devalued currency, so their buying power relative to the other country will have collapsed.
- throw-7462637 5y ago
  > People weren't purchasing Pelotons with $600 stimulus checks. Anecdotally, they totally were. In my immediate friends group, families that were eligible for stimulus (making around $120K/yr) spent it on luxury items including photo cameras and as a downpayment for new cars. I don't know anyone who bought a peloton but extrapolating what I saw in my circle, it's totally believable.

callmeal 5y ago

>I think it’s naive to say that a couple stimulus checks and some unemployment is responsible for high consumer spending. It is naive - because people go off the outrage posts and ignore reality. Stimulus checks were disbursed between March 2020 and March 2021 - it's been almost a year since the last stimulus and people are still harping on it.