Thursday, March 18, 2021

Hooray For The Stimulus

We received our stimulus payment yesterday. It was a St. Patrick's Day miracle! While we haven't figured out what to do with all of the money yet, I'm leaning towards flying to Vegas, hitting the clubs, and getting bottle service. Either that or paying off debt and putting money into the kids' college funds. It's a close call. 

I'm not an economist, but I'm going to try to play one on the internet today. The front page of Sunday's Washington Post featured this article titled "What used cars tell us about the risk of too much inflation hitting the economy." The authors Rachel Siegel and Andrew Van Dam describe the demand for used cars and how prices increased significantly last year. Of course, the article is about more than used cars. This is the third paragraph of the story:

What's happened at places like Deal Depot and other dealers shows why some top economists and Wall Street investors are concerned that the $1.9 trillion stimulus President Biden signed into law last week could spur a risky cycle of rising prices across the whole economy.

I'm not old enough to remember the high inflation that occurred in the US during the late 1970s, but for some people 50 and over, this is a real concern. However, let's take a step back. The last year has been really difficult for a lot of people. According to the latest Bureau of Labor Statistics information, the unemployment rate is 6.2%. While this seems pretty good, especially since this rate was more than double nearly 12 months ago, in February 2021, 13.3 million people reported that they had been unable to work because their employer closed or lost business due to the pandemic. In addition, food insecurity is still impacting way too many people. Just doing a quick news search, I found articles published in the last week about food insecurity up 38% in Monroe County, NY (where Rochester is located), the Maryland Food Bank distributing 61 million pounds of food over the last year compared to 32 million pounds the year before, and the Missoula, Montana food bank serving 20% more individuals than the previous year. So let's hold your horses on the inflation talk. (Yes, I wrote hold your horses!) 

Many people receiving this stimulus really need it for things like food, rent, and clothing. And yes, some people may use the stimulus money on used cars because they don't have reliable transportation or don't want to put the money into repairs for their current vehicles. I'm guessing that a lot of people who purchase used cars will utilize them to get to and from work.  

I'm curious what these top economists and Wall Street investors cited in the paragraph quoted above thought about the tax cuts during the Trump administration. Were they concerned about rising prices? Or did they think that trickle-down economics would help those who need the stimulus money the most now (even though it never does)?

Overall, I'm not worried about inflation. Yes, gas prices are going up, but it seems to me that this has a lot to do with increased demand as people are driving more and Texas being out of commission for part of February. Besides, my stimulus money will more than pay for the cost of a few more fill-ups at the gas station. Plus, I feel even better about the stimulus thanks to Republican Senator Roger Wicker of Mississippi. He celebrated its passage by tweeting "Independent restaurant operators have won $28.6 billion worth of targeted relief. This funding will ensure small businesses can survive the pandemic by helping to adapt their operations and keep their employees on the payroll." I mean, sure he voted against it, but even he sees it as a good thing. 

Photo by Tony Tran.

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