By Taxpayers Association of Oregon
We are living in unparalleled economic experimental times.
When the first near- trillion in stimulus checks to citizens and businesses arrived,, something unexpected happened. People began savings their stimulus. That’s right. Nearly 25% of all stimulus awarded was put into savings.
More stimulus came in various ways. Pausing student loan payments provided many families $5,000 to $10,000 in annual relief. Stimulus for many taxpayers with children saw $6,000 in direct cash infusions to a family of two. One measure determined that the average middle class taxpayers gained $25,000 in various stimulus.
Now that the pandemic is over, we see that $1.2 trillion is still saved.
The Wall Street Journal Reports; “Economists estimate that headed into the third quarter of this year, households still had about $1.2 trillion to $1.8 trillion in “excess savings”—the amount above what they would have saved had there been no pandemic…In 2019, before the pandemic hit, households saved 8.8% of their disposable income. That saving rate jumped to 16.8% in 2020, the highest annual saving rate on record, as government stimulus and unemployment benefits left many consumers flush with cash …Economists’ estimates for how much consumers have left vary. Mr. Shepherdson puts it at $1.3 trillion and estimates that at the current rate of rundown, that could last another year or so. JPMorgan Chase & Co. put the hoard at about $1.2 to $1.8 trillion in the third quarter, and said it could be entirely spent by the second half of next year…”
The stimulus failed to fully stimulate.
The stimulus and the entire near-$9 trillion in extra spending during the pandemic has resulted in inflation which now has wrecked the economy and shrunk people’s wages. It has also exploded the deficit for which we is crippling our budget and forcing us to pay interest that did not exist as such before the pandemic.
The fact that so many people are still hurting meant that much of the stimulus didn’t go to the people in need — as also it went to many who were not even asking for it and others simply sat on it. Still others, dumped it into junk stocks and distorted the stock market.
To spend that much money that people didn’t use and the end result is a inflation wrecked economy (that could last 5-9 years), a recession, and debts and debt interest payments that will hurt us all for a generation, seems to send alarm bells that things went horrifically wrong. Yet, few people are talking about it in this way.