In case you’re wondering. . .
. . . just how much individual families will receive from the recently passed $1.9 trillion COVID stimulus bill, here is what a married couple earning $150,000 with 2 children will receiv:
- Six checks at $1,400 each: $8,400;
- Two childcare credits at $3,600 each: $7,200;
- Two child credits at $3,000 each: $6,000;
- Total walking around money: $21,600
Note that a couple making $150,000 a year puts them in the top 15% of households. The couple did not have to suffer any loss of income to receive the $21,600. As for the balance of the $1.9 trillion bill, it will go primarily into pork barrel spending, such as bailing out blue states.
Further, The Economist recently ran an article estimating that “the world’s consumers” have an extra $3 trillion, which they saved during the COVID lockdowns. Had the pandemic not happened, The Economist estimates households would probably have stashed away $3 trillion in the first nine months of 2020. In fact, they saved $6 trillion.
So, how will these funds, “an extra $3 trillion,” be spent, along with the $925 billion the COVID stimulus bill is handing out. And what if consumers spend more than the “extra $3 trillion?” What if they dip into the $6 trillion they saved?
If these guesstimates are any where near accurate, there will be a lot of spending ahead. Consumer goods, autos, new homes, and stocks. And with all this spending, how can inflation be held back? Certainly, inflation will over shoot the Fed’s target of 2%.