Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

What’s Up with the Economy?

June 30, 2020 By Jeremy Jones, CFA

Unemployment is running at over 13%, but much of the economic data is coming in better than economists have been forecasting. And the stock market is down only modestly for the year in the face of what looks like a dire economic situation.

What’s driving the disconnect?

The personal income statistics from the Bureau of Economic Analysis may shed some light.

The chart below shows the level of after-tax personal income for the U.S.

In most recessions, after-tax income falls or if there isn’t an outright decline, there is a significant slowing in the rate of growth.

But not in this recession.

Instead of COVID causing a crash in after-tax income, it has resulted in the biggest two-month increase on record.

Where did all of that extra income come from?

Uncle Sam went on a spending spree (financing courtesy of Jay Powell).

Regardless of where the additional income came from, it’s money in the pockets of consumers and businesses. Money that has made its way into the stock market, and is starting to make its way into consumer and business spending.

Flush with stimulus checks and unemployment benefits that pay more than many full-time jobs, many Americans haven’t yet felt the economic pain from crashing business activity.

Yet being the operative word. The problem arises when the windfall runs out. The second chart below shows pre-tax personal income minus transfer payments. Take the government out of the equation and the situation looks a lot uglier.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Consumer Economy is Hot
  • The Trump Economy is Rolling
  • More Good News for the Economy
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Richard C. Young & Co., Ltd. was ranked #5 in CNBC's 2021 Financial Advisor Top 100. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • BULLWHIPPED? Inventory Overhang Could Slow Growth in Certain Sectors - May 20, 2022
  • MARKET TURNING: Canada’s Housing Market Turmoil - May 19, 2022
  • HORDING CASH: Funds Hold the Highest Level of Cash Since 9/11 - May 18, 2022

Search Young Research

Most Popular

  • MARKET CHAOS: This May Take Time, Here’s How to Prepare
  • PRICES SOAR: Diesel Shortage Could Cripple America's Economy
  • Your Survival Guy: “Sell in May, Buy After Labor Day?”
  • All-Powerful Money Managers Voting YOUR Money Targeted by Senate GOP
  • Institutional Investors Fall in Love with Oil, Again
  • COMMODITY CRUNCH: Will Tesla Buy a Cobalt Mine?
  • CRYPTO: Has the Fire Gone Out?
  • The Power of a Compound Interest Table
  • The Innovation Bubble Goes Bust
  • HORDING CASH: Funds Hold the Highest Level of Cash Since 9/11

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • Joe Biden – Malicious, Incompetent, a Wannabe Left Wing Ideologue?
  • Jean-Pierre: Economy “Not Something that We Keep an Eye on Every Day”
  • Job Market Survival Advice for Graduates and for Those YOU Love
  • The Destructive Rise and Fall of BLM
  • What Would We Do without the Experts?
  • V4 Stands Against North African and Middle Eastern Invasion
  • BUY THE DIPS? Can You Catch a Ginsu Knife?
  • Florida: Enjoy Certain Freedoms and Individual Liberties
  • ENERGY FREEDOM ACT: Ted Cruz Introduces Bill for Energy Independence
  • Consequences of Biden Killing the Keystone Pipeline

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2022 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.