Stimulus shows up in consumer spending
June 26 - Can we measure the effects of the economic stimulus legislation? We are just starting to see effects show up in U.S. economic data.
The initial direct effects of the stimulus legislation on personal income are estimated in monthly personal income and spending data released today by the Bureau of Economic Analysis (which produces the GDP numbers).
The BEA tells us that people had a lot more money in their pockets in April and May because of the stimulus legislation, which lowered personal taxes and increased payments to individuals by the government.
| Average Q1 '09 |
April | May | |
| With Stimulus | - | +1.3% | +1.6% |
| Without Stimulus | +0.5% | +0.9% | +0.2% |
Did people save or spend the additional money? (Economists call this the "multiplier" effect.) Today's data suggests that while they boosted spending, they may have increased their savings proportionately more. However, it may be too soon to tell: income stimulus often feeds through to spending with a lag, as confidence builds. Stay tuned for more spending, confidence and savings data in the months ahead.
