(ignoring the whole fungibility reality).
From Upfina:
The April PCE report will go down in history as the most unusual ever because government transfer payments boosted income, while uncertainty and the inability to go out thwarted spending. That’s partially why people had the money to buy stocks. They couldn’t spend it on anything else. Plus, many people who have lost their jobs aren’t paying rent. The chart below details the median unemployed worker’s income in 10 common occupational areas. 68% of people who are unemployed are making more money than they would with their normal job.
As you can see, food service workers are getting paid almost double than normally. The situation will reverse course once the CARES Act benefits expire at the end of July. It would be a major policy blunder if the government allows millions of people to lose these benefits before the labor market sufficiently recovers. We think it makes sense to have a bridge where the payment is lowered, but still helps people in the months before they can get a job. The worst case scenario is no benefits are added and there is a 2nd wave of COVID-19. With the November election in play, you would think both parties would want to do whatever it takes to avoid economic discomfort. Plus, it’s good policy to prevent lasting damage.....MUCH MORE
You will never see anything like this again. 5 year annualized real personal income growth net of government transfer payments is 0.71%. Once a couple more weak data points are added to this average, it will blow past the previous record low of -0.31% in December 2009. As you can see from the chart below, government social benefits as a percentage of personal income increased from near 17% to above 30%. The percentage had been rising on a secular basis because of the increase in social programs, increase in inequality, and the aging population. This spike will reverse course when the extra $600 in unemployment benefits expire and more so when people get their jobs back....
