Covid 19 and income, spending, and savings in US

Neil Irwin and Weiyi Cai have three excellent graphics that summarises the economic impacts of Covid 19 stimulus programs in the US. 

On household incomes

Americans’ income from unemployment insurance benefits was 25 times higher from March through November 2020 than in the same period of 2019.

On household spending

On household savings

Including the latest $1.9 billion stimulus, the effects are most likely larger still.

Then the stimulus has had its inequality dimension:

So how can the number of jobs be down 6 percent but employee compensation be down only 0.5 percent? It has to do with which jobs have been lost. The millions of people no longer working because of the pandemic were disproportionately in lower-paying service jobs. Higher-paying professional jobs were more likely to be unaffected, and a handful of other sectors have been booming, such as warehousing and grocery stores, leading to higher incomes for those workers.

This is an important reason for the persistence of the equity market boom despite the profound economic shock and economic output compression. It's a classic asset inflation driven by too much money chasing too few scrips. Worsening matters, thanks to the likes of WFH and social media, too many people have gotten into the game. 

These raise important questions. How much of these boosts to household balance sheets are a transfer of wealth from future generations? What will be its impact on public spending in the years ahead? Will inflation and economic growth be able to wipe out the increased debt burden over the medium-term? Will this inflationary episode be a manageable one?