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Saturday, March 21, 2009
20 March 2009
Light at the end of the tunnel
But we still have income to fall back on. In fact in January, our disposable personal income jumped by 1.7% (see Chart 2), thanks in no small part to government unemployment insurance, which accounted for 0.93% of disposable personal income, the highest percentage since July 1983 (see Chart 3). Thank goodness for automatic stabilizers, huh?
We concede that the demand to hold that money stock also may be growing as well, but the economy would be in even worse shape if that increased demand for money were not being accommodated by an increased supply. When the federal government’s fiscal stimulus program is implemented, we expect the money supply to grow even more rapidly and its "velocity" to increase because the increased money supply will be to fund increased government spending.
In sum, although the economy remains mired in a severe recession, we have seen nothing of late to dissuade us from our forecast of recovery getting underway in the fourth quarter of this year. In fact, what we have seen of late increases our confidence in the forecast.
Light at the end of the tunnel
But we still have income to fall back on. In fact in January, our disposable personal income jumped by 1.7% (see Chart 2), thanks in no small part to government unemployment insurance, which accounted for 0.93% of disposable personal income, the highest percentage since July 1983 (see Chart 3). Thank goodness for automatic stabilizers, huh?
We concede that the demand to hold that money stock also may be growing as well, but the economy would be in even worse shape if that increased demand for money were not being accommodated by an increased supply. When the federal government’s fiscal stimulus program is implemented, we expect the money supply to grow even more rapidly and its "velocity" to increase because the increased money supply will be to fund increased government spending.
In sum, although the economy remains mired in a severe recession, we have seen nothing of late to dissuade us from our forecast of recovery getting underway in the fourth quarter of this year. In fact, what we have seen of late increases our confidence in the forecast.