More Evidence of MORE Income

As noted a few days ago, the benefits provided by the government so far have likely more than offset the loss in income by consumers. Today’s data on real incomes show that more clearly. Here’s the data.

Real Income and Real Income minus Transfer Payments (year-over-year change)

Usually changes in real income and real income minus transfer payments are about the same. Not in April.

Real Income went UP 11% while Real Income minus transfer payments went DOWN 7%. Thus, the government stimulus so far has more than offset lost wages.

This should last until at least through May as the extra $600 per week lasts until July and people are still getting their $1,200 checks. It’s likely to last after that as well as Congress appears posed to pass even more relief in the next few weeks.

Policy is Changing

It’s clear policy rules are changing: OC has record high 7 day average hospitalizations, deaths, and new cases… and yet continues to reopen. See the data here:

Number of New Cases per Day, Hospitalizations, and patients in ICU (left axis) and Number of Test (right axis)

Note the number of tests has been declining so this isn’t a testing increasing issue. Plus deaths and hospitalizations doesn’t depending on testing asymptomatic people.

The question is what this means for our recovery and economy. We will see soon what percentage of the decline in demand is due to mandatory stay-at-home and what percentage is due to people voluntarily staying away due to fear.