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0 pointsadam_arthur4y ago0 comments

This chart tells you most of what you need to know.

https://fred.stlouisfed.org/series/RPI

This shows the insane increase in personal income over the course of the pandemic.

Many made more money on enhanced UI benefits than in their line of work. This is a known fact.

People in this situation have more propensity to spend the marginal dollar than higher income earners. Spending as a percentage of income inversely trends with level of income.

It's true that some percentage of retail spending is spending shifted from other categories, but given personal income data, I doubt that's the primary cause.

Also keep in mind, there was mortgage forbearance, rent forgiveness, and student loan moratorium (which is still ongoing I believe).

Those factors don't show up in income, but will shift expenses from loan interest to goods most likely.

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6 comments · 2 top-level

8note4y ago· 2 in thread

I do know something else not specified by the chart.

Everyone's been stuck at home and purchasing consumer items that would usually be bought in bulk and supplied by employers, restaurants, etc.

Claiming it's government spending as the cause and not covid as the cause seems silly

adam_arthurOP4y ago

The ability to spend is constrained by aggregate income and available credit in society.

Shifts in spending from services to goods can only alter consumption patterns so much.

Here is the Fed data on services spending: https://fred.stlouisfed.org/series/PCESV

As you can see, services spending is equivalent to 2019 levels today, while goods spending is 20% higher.

Consider the level of fiscal stimulus, monetary stimulus through lower rates (cheaper credit), and expense reduction (moratoriums, forbearance).

The sheer magnitude of demand stimulation is frankly obvious, even without digging into the data. Of course, the data backs up this theory as well.

Saying it's "covid" isn't saying anything at all. You have to quantify what you're suggesting. What is the mechanism that can explain persistently higher goods spending? The data doesn't bear out substitution as the primary mechanism, either way.

ec1096854y ago

There’s a backlog of savings from limited service spending that is being worked through right now.

1 more reply

pixl974y ago· 2 in thread

How much upshifting in jobs has occurred?

Before the pandemic we talked about unfilled jobs looking for computer programmers and other higher paid positions. How many people moved from 'social' jobs to ones that required more skills but pay more?

Jolter4y ago

You mean all those underemployed software engineers and all the trained programmers forced to wait tables because they couldn’t get a programming job?

That is not how I remember the world in 2019.

pixl974y ago

You took that the wrong way. Software engineers moved up. I've gotten 2 promotions since the pandemic started. I'm talking about people shifting industries in to ones that have been short staffed, like programming, and leaving the crap jobs behind.

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