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Your assertion assumes that demand would not have contracted in April 2020 absent government intervention, which seems suspect. Unless you believe no one would
by giaour 5y ago
Your assertion assumes that demand would not have contracted in April 2020 absent government intervention, which seems suspect. Unless you believe no one would have adopted any pandemic precautions absent activity restrictions, thereby averting any demand drop in, say, the entertainment and hospitality sectors.
- thisisnotatest1 5y agoDemand reflects consumption opportunities People kept receiving salaries, and unemployment benefits. So financial position and income of families was always strong There's no precautionary savings cycle.. People engaged in financial risk taking by buying houses like never before
- giaour 5y ago> People kept receiving salaries, and unemployment benefits. So financial position and income of families was always strong I'm confused; weren't you arguing above that unemployment concerns shouldn't have motivated government spending because the drop in demand was artificial? You can't bolster that position by saying that the demand stayed strong because of unemployment benefits and salaries that went out despite people staying home; those spending categories (PPP loans and enhanced unemployment benefits) were a government subsidy to keep demand from cratering.
- ac29 5y ago> There's no precautionary savings cycle.. People engaged in financial risk taking The personal savings rate tripled in early 2020: https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT