How Much Free Money Stimulus Still Hasn’t Been Spent?




The question is not as straight forward as it looks. The gap between spending and income isn’t constant. 

Free money that goes to bottom rung households tends to immediately get spent. The higher the rung, the more the savings. This is complicated by the fact that most of the money was supposed to go to lower tiers, and further complicated by corporate fraud, especially in round one. 

More importantly, personal spending does not count mortgage paydowns, stock market or Bitcoin purchases, capital expenses for businesses, drug money, other illegal uses, or money sent to relatives overseas. 


The Peterson Foundation reports direct checks were $292 billion in round one, $164 billion in round two, and $411 billion in round three.

There was $850 billion of direct payments to taxpayers with the biggest and most unwarranted round the last.

Spending data suggests free money, at least most of direct payments, already did enter the economy. 

However, that does not factor in unpaid rent via eviction moratoriums or SNAP (Supplemental Nutrition Assistance Program), formerly Food Stamps, which I will address in a separate post. 

So yes, there still could be a pile of unspent stimulus savings, possibly much higher than my $2 trillion summation estimate, again with my caveats on investments, sending money overseas, etc.  

Author(s): Mike Shedlock

Publication Date: 22 Apr 2022

Publication Site: Mish Talk

Pandemic divergence: The social and economic costs of Covid-19




First, we compute the differences between the output paths for 2020–2030 projected before and after the pandemic (the shaded area in Figure 1) and estimate its present value discounting at a 0% real interest rate (a reasonably conservative assumption in a context where real rates are negative for most developed countries). This yields a total loss of about half of global GDP. 

Next, there is the question of the fiscal stimulus (equivalent to 15% of GDP, according to the IMF fiscal monitor) without which the output loss in 2020 would have been much steeper. How much of the economic impact of the fiscal unwinding is properly accounted for in the revised growth projections (Beck et al. 2021), particularly given that a big part of the stimulus (6% of the 15%) was below the line (loans, equity stakes, guarantees) with a cost that is contingent on the speed and composition of economic recovery in each country? There is no simple answer here. Moreover, we are ignoring potential bouts of financial stress or debt restructurings in heavily indebted countries (Persaud 2021), as well as the second wave of stimulus already in line for 2021 in many advanced economies. All things considered, adding the full 15% of GDP as an indicative measure of the cost of fiscal support does not look unreasonable. 

Third, there is the value of the excess deaths due to Covid-19. There is, of course, no uncontroversial way to put a value on human life. For the sake of argument, we follow a recent estimation for the US by Cutler and Summers (2020) that uses the ‘statistical lives’ value to place it between $10 million and $7 million per life. If we take the considerably more conservative $5 million per life, acknowledging that the statistical value may vary across countries, the cost related to the global cumulative deaths registered so far amounts to 16.9% of global GDP.

Author(s): Eduardo Levy Yeyati, Federico Filippini

Publication Date:

Publication Site: Vox EU

So, Can States Cut Taxes or Not?



Most observers believe that the Treasury will interpret the law narrowly. Rather than seeking to claw back funds from any states passing tax cuts or credits, the feds are considered likely to challenge only those states that clearly use federal dollars to pay for them. “Nothing in the act prevents states from enacting a broad variety of tax cuts,” Treasury Secretary Janet Yellen wrote in a response to the AGs. “It simply provides that funding received under the act may not be used to offset a reduction in net tax revenue resulting from certain changes in state law.”

But the fact that the law blocks federal money from being used even indirectly to pay for tax cuts has state officials not just worried but angry. “Democrats in Washington and in the White House are not going to tell me, or the Georgia General Assembly, that we can’t cut taxes for hard-working Georgians,” Gov. Brian Kemp complained at a news conference last month.


That prohibition lasts as long as the stimulus dollars are spent, which will be into 2024. And there are limits, Walczak notes, on where and how states can spend federal aid. They can use the money to address pandemic and health needs, for example. While those are clearly ongoing, much of the cost of vaccine supply and distribution has been underwritten by the feds. Other costs in these areas have already been addressed by last year’s federal CARES Act, which some states struggled to spend.

Author(s): Alan Greenblatt

Publication Date: 7 April 2021

Publication Site: Governing

Pension Relief Plan in COVID-19 Stimulus Bill That Passes House



On Saturday, a measure to give troubled multiemployer pension plans assistance from the Pension Benefit Guaranty Corporation (PBGC) passed the House of Representatives, as part of a larger $1.9 trillion coronavirus relief package from President Joe Biden. 

The federal stimulus package, which includes $1,400 checks for many Americans and increased funding for vaccines, also holds the Emergency Pension Plan Relief Act of 2021 (EPPRA), an update to the Butch Lewis Act. It’s a bill that lawmakers expect will help stabilize the multiemployer pension plans that are in danger of insolvency. 

Of the more than 10 million multiemployer plan participants, about 1.3 million are in plans that will soon run out of money. 

Author(s): Sarah Min

Publication Date: 1 March 2021

Publication Site: ai-CIO

The good and bad in Biden’s giant relief bill



Aid to states and cities. Cost: $350 billion. This money would offset lost tax revenue and help mayors and governors “mitigate the fiscal effects stemming from the public health emergency,” according to draft legislation. it’s clearly related to the pandemic, so it counts as relief, but it might also be more than states and cities need, since government revenue has held up better than expected during the last 12 months. 


Pension reliefCost: $74 billion. This money would address longstanding problems at roughly 1,400 underfunded pensions covering 10 million workers and retirees, most of them belonging to unions. A government agency called the PBGC is supposed to backstop pensions that run short of money, but it, too, is drastically underfunded and poised to collapse in coming years. The money in the House bill would bail out the riskiest pensions, but it’s controversial because it’s not paired with needed reforms—and it’s not specifically related to problems caused by the pandemic. This could be one provision that doesn’t survive the Senate.

Author(s): Rick Newman

Publication Date: 22 February 2021

Publication Site: Yahoo Finance

Fed Chairman Vows to Keep Supporting Economic Recovery



The Fed will continue $120 billion in monthly bond purchases and communicate any change.

Powell doesn’t expect any large and persistent increases in inflation; some pickup will be temporary.

Powell says getting the pandemic under control is needed for the economy to reopen.

Author(s): Bernice Napach

Publication Date: 23 February 2021

Publication Site: Think Advisor

The problem with going big on stimulus, as Biden is



First, wise public sector investments are better for the poor than one-time wealth transfers. The U.S. is still reaping the benefits of the great public health and public works achievements of the 20th century. Second, the most enduring and beneficial government-transfer programs, such as Social Security, have been built on sustainable majorities.


It’s not as if there aren’t obvious candidates for alternative investment: green energy, broadband and public health infrastructure for the next pandemic, to name a few. Yes, I am familiar with the argument that spending the extra trillion or so now will make it possible to spend more trillions later, including on such policies. But whatever kind of complicated political story you might tell, the basic laws of economics have not been repealed. Increasing current expenditures does, in fact, involve foregone future opportunities.

Author(s): Tyler Cowen, Bloomberg Opinion

Publication Date: 10 February 2021

Publication Site: Star Tribune

Lower-Income Covid-19 Aid Recipients Seen Boosting Consumer Spending



Early signs point to an uptick in consumer spending at the start of the year, particularly by lower- and middle-income households receiving payments through the most recent Covid-19 relief package.

Spending by consumers who make less than $60,000 a year jumped by more than 20% in the week ended Jan. 10—the week after the U.S. Treasury Department began electronically sending stimulus payments of $600 per adult and $600 per child for individuals with adjusted gross incomes under $75,000—according to the research group Opportunity Insights’ tracker of figures from Affinity Solutions, which collects consumer credit- and debit-card spending data.

Author(s): Harriet Torry

Publication Date: 14 February 2021

Publication Site: Wall Street Journal