Thread by @sebkoenigs

Great @nytimes column on how changes in earnings, incomes and consumption during the #COVID19 crisis contributed to buoying asset markets at a time of such great economic despair @Neil_Irwin h/t to @dynarski
nytimes.com/2021/01/01/ups…

[Thread]

1) Even while millions of U.S. workers lost their jobs, aggregate salaries and wages have only declined a little, by 0.5% for March to November. Part of the story: the crisis impact has been highly unequal, and job and earnings losses disproportionally struck low-paid workers

2) Income support to unemployed workers has been huge: total income from unemployment benefits in the U.S. was 25x (!) higher for March to November than in the corresponding period in the previous year.

3) As a result of public income support, total after-tax income _rose_ by a remarkable 8%, or around $1 trillion. This reflects increased support to the unemployed, but also the $1,200 checks paid to most American households (whether or not directly affected by the crisis).

4) At the same time, total household spending declined, notably because of a strong drop in spending on services (restaurants, flights, etc.) during the pandemic.

5) As aggregate disposable incomes rose and spending dropped, the savings rate soared: +173% relative to 2019. Households less affected by the crisis used the extra income and the money they saved to invest in financial markets or real estate, boosting stock and house prices