The numbers tell a story... In February last year, the US unemployment rate was 3.5%, WFH was an ultra-rare luxury, and "stimulus" was an SAT vocab word we didn't recognize. The economy didn't know what was about to hit it. In numbers:
- 22M US jobs were lost from March to April, as unemployment hit 14.7%.
- 30 major retailers declared bankruptcy, and 100K+ small businesses permanently shut down.
- $5T: Stimulus spending from Congress, including the upcoming $1.9T bill.
- $28T: The massive US national debt, which has been financing the stimulus(es).
Things are looking up... The economy has gained ~12M jobs since March, the unemployment rate has fallen to 6.2%, and GDP is growing again. Plus, there's a massive $1.9T stimulus package coming. If it’s anything like the first two, American wallets can expect some extra padding:
- After Stimulus Round #1, Americans saved a record 33% of their disposable income in April 2020 (up from 8.2% in February). That was largely thanks to stimulus checks and boosted unemployment.
- After Stimulus Round #2, personal income rose 10% in January, thanks to a fresh round of (smaller) checks. And consumer spending jumped more than 2%.
The social safety net grew massively... and so did Americans’ savings. The upcoming stimulus, which includes $1.4K checks, could provide the final recovery boost that the economy needs. It’s expected to be passed on Friday, and checks could go out as soon as next week. For ~10M unemployed Americans and millions more who are struggling, that could be a big help. But too much saving could actually hurt the economy.