> Meanwhile, shoppers have been spending at record levels, unleashing all the money saved by not traveling or going out — and their cooped-up pandemic anxiety — onto buying things
I don't think its all money saved from not traveling and going out. I think a large percent of the savings had to do w/ the generous unemployment benefits and stimulus payments. If you look at the person savings rate in the US, you'll see two huge spikes around the time of the transfer payments and then level near pre-pandemic levels in the last few months.
Strange it wasn't mentioned as a possible cause.
[EDIT] The reason that its important is that a lot of articles talk about "supply" or "worker" shortages as though its some naturally occurring innocuous condition, and not a result of policy. If you think its just money people saved up from last year, then everything will even out. Instead of buying a car last year, you'll buy it this year. But it ignores the introduction of 12 trillion dollars into the system (or around 30% of the current money supply). Its unprecedented and it's the reason you've seen financial assets rally to well past pre-pandemic levels. And for some reason, we think financial asset appreciation not based on fundamentals is positive. But this is beginning to creep into other assets and people are beginning to notice.
Let's not forget that the reason the stimulus was issued is because people lost their jobs as entire sectors were crippled because of the pandemic. Those stimulus checks have long been spent to pay bills. At least for a large number of people I am sure HN crowd is not part of.
I watched everyone around me get the free money in spite of having kept their jobs. Meanwhile my job was cut 100% due to COVID and I didn’t get a penny.
They weren’t COVID stimulus/relief checks they were income redistribution. I wish people would call things what they are.
Correct. Should have clarified. 5.92 trillion legislative and 6.84 trillion in Fed actions. That's what was allocated. Spent so far is 8.6 trillion. The fed actions include mostly asset purchases (e.g. 2.5 trillion in treasuries, 1.2 trillion in buying MBS, etc). This introduces money into the system and is what I believe is driving the strangness we've been seeing (financial assets up 30% from pre-pandemic levels, increase in inflation, supply chain shortages, etc).
This is the best site I found to track the spending:
> I think a large percent of the savings had to do w/ the generous unemployment benefits and stimulus payments.
These weren't generous. They barely covered half of rent in the cheapest Midwest towns.
I know programmers on HN could just work remote and code their way through the whole pandemic without an issue -- but for the majority of regular folks, COVID represented an overall wealth cut of some amount (even despite some folks getting some minor extra unemployment). Even for folks who didn't lose their jobs at all, prices went up for literally everything, wages have been frozen for years prior, and (since they didn't lose their job) most of the support programs never helped them.
> If you look at the person savings rate in the US, you'll see two huge spikes around the time of the transfer payments
Yes, financially stressed people tend to cut all optional expenses as fast as possible. Have you never been laid off or fired before? A spike in savings rate doesn't mean people got wealthier. For regular working-class folks, a spike in savings is what you see when you expect your paycheck may vanish with zero notice, it usually indicates that people got poorer and panicked.
> Strange it wasn't mentioned as a possible cause.
Because there's an approximately 0% chance it's the cause. This "everyone is lazy now because the government helped them slightly once" excuse is a conservative talking point, not a real thing that actually happens.
> The reason that its important is that a lot of articles talk about "supply" or "worker" shortages as though its some naturally occurring innocuous condition, and not a result of policy
Well, there's also almost a million extra dead people from COVID, not all of whom are retired seniors, some of whom presumably held some kind of job. There's also a lot of people who were forced to live for the past two years on severely reduced or unpredictable income, now realizing they don't have to take a shit deal from their employers.
As far as I've seen, there's no "worker shortage" anywhere in the US. There is a "companies that won't treat employees like dogshit" shortage. That's been building for decades now, and having a bunch of people forced out of work anyway has taken some of the fear away, since many folks have now been unemployed anyway and can better handle that worst case scenario.
> But it ignores the introduction of 12 trillion dollars into the system (or around 30% of the current money supply). Its unprecedented and it's the reason you've seen financial assets rally to well past pre-pandemic levels.
The vast, vast majority of that money went straight into wealthy peoples hands (via things like PPP giveaways for businesses only). Actual regular humans got only a tiny portion of that cash. That's also why asset prices are sky high, workers generally can't afford to buy assets at all, wealthy people buy assets, to hoard their money. Assets are high because wealthy people got a huge injection of cash they've never needed, and are trying to retain it ASAP.
It's certainly not because an unemployed concert hall worker got an extra $200/month unemployment for a few months or because a working nurse got $200/month (3 stimulus payments divided by 18 months) or whatever. That kind of cash can't even buy a used car anymore, much less any kind of meaningful asset.
> I know programmers on HN could just work remote and code their way through the whole pandemic without an issue -- but for the majority of regular folks, COVID represented an overall wealth cut of some amount (even despite some folks getting some minor extra unemployment).
From WSJ [0]:
>> The coronavirus pandemic plunged Americans into recession. Instead of emerging poorer, many came out ahead. U.S. households added $13.5 trillion in wealth last year, according to the Federal Reserve, the biggest increase in records going back three decades. Many Americans of all stripes paid off credit-card debt, saved more and refinanced into cheaper mortgages. That challenged the conventions of previous economic downturns. In 2008, for example, U.S. households lost $8 trillion.
> Because there's an approximately 0% chance it's the cause. This "everyone is lazy now because the government helped them slightly once" excuse is a conservative talking point, not a real thing that actually happens.
Really? 0%? I never made a case that anyone was lazy. You're throwing politics into it for no reason.
> Well, there's also almost a million extra dead people from COVID, not all of whom are retired seniors, some of whom presumably held some kind of job. There's also a lot of people who were forced to live for the past two years on severely reduced or unpredictable income, now realizing they don't have to take a shit deal from their employers.
Median incomes were down from 2020, but above 2019 levels [1]
> The vast, vast majority of that money went straight into wealthy peoples hands (via things like PPP giveaways for businesses only). Actual regular humans got only a tiny portion of that cash. That's also why asset prices are sky high, workers generally can't afford to buy assets at all, wealthy people buy assets, to hoard their money. Assets are high because wealthy people got a huge injection of cash they've never needed, and are trying to retain it ASAP.
Take a look at where the money really went [2]. I agree a lot (too much) went to businesses, but a large portion went directly to workers. This includes 835bn paycheck protection program, 717bn for unemployment, and 869bn for direct payments (3 stimulus checks).
UI benefits during covid were several thousand dollars a month. ($600 a week + state UI benefits) That's like 6x rent in the cheapest midwestern towns.
A lot of people who have received "generous unemployment benefits" are using it to scrape together rent and keep themselves fed. They never had the money for traveling or going out, and they don't have that money for shopping now.
Some people, sure. But if most people were using it to pay rent and keep themselves fed, the savings rate wouldn't have shot up.
Take a look at the definition of personal savings rate:
> Personal saving as a percentage of disposable personal income (DPI), frequently referred to as "the personal saving rate," is calculated as the ratio of personal saving to DPI.
> Personal saving is equal to personal income less personal outlays and personal taxes; it may generally be viewed as the portion of personal income that is used either to provide funds to capital markets or to invest in real assets such as residences.(https://www.bea.gov/national/pdf/all-chapters.pdf)
You're conflating the pandemic with the pandemic stimulus. The savings rate shot up among the classes that remained employed but whose expenses fell through the floor. These people got little of the unemployment benefits, and many were also above the threshold for the stimulus checks.
I'm not making a moral judgement. When you look at broad economic trends you need to consider the aggregate. Some people are worse off, but on the aggregate people had more disposable income which I believe is driving up asset prices and now consumer prices
I think you are conflating pandemic stimulus with unemployment relief. I largely agree that saving for the poorest hasn't gone up. Anyone with investments came out of pandemic great from all of the market stimulus.
It would be interesting to see how much of the increased spending and saving is coming from different demographics.
Is it people so saved a few thousand from skipping a vacation, or people who saw a hundred thousand dollars added to their retirement account?
There is also the prepayment of EITC. I know that we have always in the past counted on it reducing our tax bill. Now it's direct deposited each month into our account. We have had to take it out and save it going forward to pay against our future tax bill. It's going to make a lot of people unhappy when they realize in March/April that the money wasn't additional or "new"...it's money you have always subtracted from your tax bill if you had a net liability at the end of the tax year.
> Retailers want to get packages to doors in the least amount of time, which means jockeying for storage in expensive and crowded urban and suburban areas.
No mention of closure of urban urban malls and how they getting converted into warehouses, wonder why.
20 comments
[ 27.8 ms ] story [ 1097 ms ] threadI don't think its all money saved from not traveling and going out. I think a large percent of the savings had to do w/ the generous unemployment benefits and stimulus payments. If you look at the person savings rate in the US, you'll see two huge spikes around the time of the transfer payments and then level near pre-pandemic levels in the last few months.
Strange it wasn't mentioned as a possible cause.
[EDIT] The reason that its important is that a lot of articles talk about "supply" or "worker" shortages as though its some naturally occurring innocuous condition, and not a result of policy. If you think its just money people saved up from last year, then everything will even out. Instead of buying a car last year, you'll buy it this year. But it ignores the introduction of 12 trillion dollars into the system (or around 30% of the current money supply). Its unprecedented and it's the reason you've seen financial assets rally to well past pre-pandemic levels. And for some reason, we think financial asset appreciation not based on fundamentals is positive. But this is beginning to creep into other assets and people are beginning to notice.
https://fred.stlouisfed.org/series/PSAVERT
They weren’t COVID stimulus/relief checks they were income redistribution. I wish people would call things what they are.
Where are you getting the $12 trillion figure from? It's several trillion dollars, it's nowhere close to $12 trillion.
Congress passed about 6 trillion in covid spending and there was another 1 trillion was spent through executive actions.
This is the best site I found to track the spending:
https://www.covidmoneytracker.org/
These weren't generous. They barely covered half of rent in the cheapest Midwest towns.
I know programmers on HN could just work remote and code their way through the whole pandemic without an issue -- but for the majority of regular folks, COVID represented an overall wealth cut of some amount (even despite some folks getting some minor extra unemployment). Even for folks who didn't lose their jobs at all, prices went up for literally everything, wages have been frozen for years prior, and (since they didn't lose their job) most of the support programs never helped them.
> If you look at the person savings rate in the US, you'll see two huge spikes around the time of the transfer payments
Yes, financially stressed people tend to cut all optional expenses as fast as possible. Have you never been laid off or fired before? A spike in savings rate doesn't mean people got wealthier. For regular working-class folks, a spike in savings is what you see when you expect your paycheck may vanish with zero notice, it usually indicates that people got poorer and panicked.
> Strange it wasn't mentioned as a possible cause.
Because there's an approximately 0% chance it's the cause. This "everyone is lazy now because the government helped them slightly once" excuse is a conservative talking point, not a real thing that actually happens.
> The reason that its important is that a lot of articles talk about "supply" or "worker" shortages as though its some naturally occurring innocuous condition, and not a result of policy
Well, there's also almost a million extra dead people from COVID, not all of whom are retired seniors, some of whom presumably held some kind of job. There's also a lot of people who were forced to live for the past two years on severely reduced or unpredictable income, now realizing they don't have to take a shit deal from their employers.
As far as I've seen, there's no "worker shortage" anywhere in the US. There is a "companies that won't treat employees like dogshit" shortage. That's been building for decades now, and having a bunch of people forced out of work anyway has taken some of the fear away, since many folks have now been unemployed anyway and can better handle that worst case scenario.
> But it ignores the introduction of 12 trillion dollars into the system (or around 30% of the current money supply). Its unprecedented and it's the reason you've seen financial assets rally to well past pre-pandemic levels.
The vast, vast majority of that money went straight into wealthy peoples hands (via things like PPP giveaways for businesses only). Actual regular humans got only a tiny portion of that cash. That's also why asset prices are sky high, workers generally can't afford to buy assets at all, wealthy people buy assets, to hoard their money. Assets are high because wealthy people got a huge injection of cash they've never needed, and are trying to retain it ASAP.
It's certainly not because an unemployed concert hall worker got an extra $200/month unemployment for a few months or because a working nurse got $200/month (3 stimulus payments divided by 18 months) or whatever. That kind of cash can't even buy a used car anymore, much less any kind of meaningful asset.
> I know programmers on HN could just work remote and code their way through the whole pandemic without an issue -- but for the majority of regular folks, COVID represented an overall wealth cut of some amount (even despite some folks getting some minor extra unemployment).
From WSJ [0]:
>> The coronavirus pandemic plunged Americans into recession. Instead of emerging poorer, many came out ahead. U.S. households added $13.5 trillion in wealth last year, according to the Federal Reserve, the biggest increase in records going back three decades. Many Americans of all stripes paid off credit-card debt, saved more and refinanced into cheaper mortgages. That challenged the conventions of previous economic downturns. In 2008, for example, U.S. households lost $8 trillion.
> Because there's an approximately 0% chance it's the cause. This "everyone is lazy now because the government helped them slightly once" excuse is a conservative talking point, not a real thing that actually happens.
Really? 0%? I never made a case that anyone was lazy. You're throwing politics into it for no reason.
> Well, there's also almost a million extra dead people from COVID, not all of whom are retired seniors, some of whom presumably held some kind of job. There's also a lot of people who were forced to live for the past two years on severely reduced or unpredictable income, now realizing they don't have to take a shit deal from their employers.
Median incomes were down from 2020, but above 2019 levels [1]
> The vast, vast majority of that money went straight into wealthy peoples hands (via things like PPP giveaways for businesses only). Actual regular humans got only a tiny portion of that cash. That's also why asset prices are sky high, workers generally can't afford to buy assets at all, wealthy people buy assets, to hoard their money. Assets are high because wealthy people got a huge injection of cash they've never needed, and are trying to retain it ASAP.
Take a look at where the money really went [2]. I agree a lot (too much) went to businesses, but a large portion went directly to workers. This includes 835bn paycheck protection program, 717bn for unemployment, and 869bn for direct payments (3 stimulus checks).
[0] https://www.wsj.com/articles/during-covid-19-most-americans-...
[1] https://fred.stlouisfed.org/series/MEHOINUSA672N/
[2] https://www.covidmoneytracker.org/
Quick search says 70% of it went to the top 20%.
That info was from the same article even. Interesting how you didn’t bother to include that part.
Take a look at the definition of personal savings rate:
> Personal saving as a percentage of disposable personal income (DPI), frequently referred to as "the personal saving rate," is calculated as the ratio of personal saving to DPI.
> Personal saving is equal to personal income less personal outlays and personal taxes; it may generally be viewed as the portion of personal income that is used either to provide funds to capital markets or to invest in real assets such as residences.(https://www.bea.gov/national/pdf/all-chapters.pdf)
It would be interesting to see how much of the increased spending and saving is coming from different demographics.
Is it people so saved a few thousand from skipping a vacation, or people who saw a hundred thousand dollars added to their retirement account?
No mention of closure of urban urban malls and how they getting converted into warehouses, wonder why.
https://pubmed.ncbi.nlm.nih.gov/9164428/
Not because of the buying spree, but because of companies leaving California.