U.S. Passes $1.9 Trillion Relief Package… President Joe Biden signed the American Rescue Plan into law Thursday.
What it means— We know most of the pieces, with most Americans getting $1,400, parents getting extra child credits that are completely refundable, cities and states getting $350 billion, and unemployed workers getting $300 weekly federal bonus checks. It’s the little things that eat at you, like forgiveness of all taxes on student loans that might be forgiven over the next four years and like the $89 billion given to multi-employer pension funds on the brink of collapse. And don’t forget the provision that states receiving federal funds are not allowed to cut taxes over the next four years or they risk having to pay back any relief funds they received.
The relief package arrives just as the U.S. economy is lifting off without it. GDP estimates for 2021 ranged from 4% to 7% before the bill passed. The package is better thought of as an economic supercharger than a relief measure. Let’s just hope the bill for the debt doesn’t come due anytime soon.
Consumer Prices Walk Up in February…Headline inflation increased 1.7% over the last 12 months and 0.4% from February to March.
What it means— A majority of the inflation last month was due to rising fuel prices, as gasoline prices increased more than 6%. Food was also up, rising 0.2%. Excluding food and energy, core inflation rose 0.1% last month and was up 1.3% over this time last year. Analysts expect inflation to rise by 0.5% to 1% over the next two months because of the base effect, which refers to falling prices last spring, which will make inflation look bigger than it is. The base effect will be temporary and should sort itself out by June. The real question is, “What happens as the economy reopens?” Some people think consumers will reenter the economy cautiously. However, Mr. Market is betting that most of us will run back to restaurants, sporting events, and tourist attractions like giddy 10-year-olds, eager to spend the money we’ve saved and the cash Uncle Sam sent us. Expect prices to reflect higher demand.
Americans Paid Off $82.9 Billion in Credit Card Debt Last Year… Over the past 10 years, Americans have added about $54 billion to their credit card debt each year.
What it means— Not only did Americans pay down their credit card debt by the highest amount in history, it also was only the second time since 1986 that we paid down our debts on an annual basis. The first time was 2009, at the depths of the Great Financial Crisis, when we paid down a mere $900 million. There’s a reason we paid down so much last year. Between the stock market and checks from Uncle Sam, we were flush, and because of economic lockdowns, we had nowhere to spend the extra cash. Why not trim those expensive credit card balances?
Americans End 2020 With Record Wealth, $130.2 Trillion… The stock market added $4.9 trillion to our wealth last year, while the real estate market added $900 billion.
What it means— Overall, household wealth increased by $12 trillion last year. Our bank accounts also swelled, with balances increasing $642.7 billion in the fourth quarter, bringing our total to $14.1 trillion. On the flip side, Uncle Sam’s debt increased by several trillion dollars as well, so some of that $14 trillion is just a wealth transfer.
Columnist Charles Blow Tries To Cancel Pepé Le Pew… It’s come to this. They went after the Muppets, took away Yosemite Sam’s hunting rifle, and burned some of Dr. Seuss’s books. Now the cancel crowd is after an animated skunk who set his sights on a cat. Blow points out that Le Pew often grabs the object of his desire, Priscilla, locks a door so that she can’t escape, and kisses her without permission. Fair enough, but he fails to mention that Priscilla is initially attracted to Le Pew until she realizes he is a foul-smelling skunk, not a cat. She’s an elitist. Or speciesist. Or something. Whatever. We can take Mr. Blow and others in the cancel crowd seriously once they set their sights on current movies, television shows, video games, and songs that glorify violence, misogyny, racism, and a host of other things rather than dig so deep to find offenses while watching cartoons and reading children’s books from decades ago.
Data supplied by HS Dent Research
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