On March 6th the Senate passed President Biden's $1.9 trillion pandemic aid package. It was a huge political victory for the Demcrats and the new administration. The financial market reaction was well telegraphed before hand. But moving along...how will all that money get spent? The WSJ has a nice breakdown of all the major spending areas, shown below. As reminder, this was the third Covid-19 stimulus plan. The first two, totaling over $2.6T, were passed in March and December 2020. So, that's $4.5T in all.
And to be sure, there has been debate, not just by politicians, whether almost $2T of aid was really needed just as mass vaccinations are taking place and the economy is posied to take-off. But Biden has learned from the lessons of 2009--essentially, go big or risk a weak recovery. And the data shows how crucial the last couple of rounds of stimulus were in keeping the economy from falling into a prolonged recession or even depression.
The chart below from Morningstar shows that household cash levels and net worth were higher in Q3 2020 than the prior year across all economic quintiles as a result of fiscal and monetary policies:
And this analyses from the NYT shows, again, how federal aid has helped states avoid the grim fiscal outcomes many economists were forecasting (yes, yes we all know economists are horrible at economic forecasting). In fact, many states generated the same or even more revenue in 2020 than 2019 (click to enlarge for the % change in y-o-y tax revenue):
And most states' current fiscal health certainly compare favorably to what happened during the Great Recession (click to enlarge):
So, four comma checks can be put to good use. It's also good to know that for the price of the FANGs or two and one-quarter Apples you can save the U.S. economy.
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