Trump hates it: Biden’s $ 1,400 stimulus checks blew up economy
Personal income jumped a record 21.1% in March, thanks in large part to stimulus payments from President Joe Biden’s pandemic bailout, propelling a long-awaited economic recovery after more than a year of uncertainty.
The big gain was the biggest monthly increase in over 60 years, reflecting the delivery of millions of $ 1.400 in direct payments from Biden’s $ 1.9 trillion relief bill that Democrats submitted to Congress on last month. The payments accounted for $ 3.948 trillion of the overall seasonally adjusted increase of $ 4.213 trillion in March in household income.
Consumer spending also rose 4.2%, the Commerce Department said on Friday, which was the biggest change since last summer after the first wave of the coronavirus.
Friday’s report indicates an economy that is slowly recovering, driven by the easing of restrictions and the rapid rollout of vaccines across the country. Economists point to widespread consumer spending to fight the economic crisis in the coming months, following major federal spending initiatives that have pumped billions of dollars into the pockets of Americans and small businesses.
The personal savings rate also rose to 27.6% in March, from 13.9% in February. Household savings surplus reached nearly $ 2.3 trillion, which intensified during the pandemic.
The latest round of stimulus payments had the biggest impact on increasing consumer spending compared to the previous two rounds, according to Earnest Research, a data analytics company.
The company said people receiving direct payments had increased total spending growth by 29% in mid-March compared to the same period two years earlier. This is much more than after the first and second direct payments, as they pushed it up by 23% and 22%, respectively.
Zach Amsel, director of data analytics at Earnest Spending, told the Wall Street Journal that the third round of stimulus payments was more targeted to align with reopening states as coronavirus cases decline and vaccinations were increasing. Earnest reported that spending by Americans who received direct aid and resided in Pennsylvania, Texas, and Florida grew twice as fast as those in California and New York.
“Local economies matter,” Amsel told the publication. “If in Texas and Florida the restrictions have never been as strict as in New York and California, you’ve seen this play out since April of last year.”
But economists believe consumer spending will rise over the summer as the country’s vaccination efforts continue and people start to go out to eat and shop in stores.
The 4.2% increase in consumer spending included an 8.1% increase in the purchase of goods and a 2.2% spike in the purchase of services, a sector that includes bars, restaurants and entertainment.
Inflation also rose 2.3% in March compared to the same period last year.
Rachel Bucchino is a journalist for the National Interest. His work appeared in The Washington Post, US News & World Report and The hill.