Americans hold the key to a huge cash economic recovery

The expansionary measures adopted by the US government and the Federal Reserve (Fed) in response to the new coronary pneumonia epidemic have made the American people have a huge cash balance; Fed data shows that the highest liquidity of the M1 money supply from March to May is higher than before The surge of 26%, a record high, also gave the US economy a strong recovery potential.

Americans hold the key to a huge cash economic recovery

The US government’s response to this economic recession is very different from the global financial tsunami. It no longer only bails out the financial industry, but directly “pays” money to the people, especially the extra unemployment benefit, which is 600 US dollars per person per week. Make up for the loss of income of the unemployed.

However, the question is whether the public will definitely spend the cash when the US economic activities are fully opened. Siegel, a professor at the University of Pennsylvania, holds a positive view and expects that consumer spending will surge in the next few months, and will drive economic growth and inflation in 2021.

economic recovery

Those who share the same views as Schiegel are mostly money school scholars who value the amount of money; they expect the US to have a spending boom next year, and there will be inflationary pressures first seen in more than 20 years. But more economists worry that it may be counterproductive, because many people are scared by the soaring unemployment rate, so even after the epidemic ebbs, people still prefer to hide cash for unexpected needs, but instead block the road to recovery.

Bloomberg Information Economists pointed out that the most worrying thing is that consumers will not reopen their wallets; if the savings rate remains high, it will hurt economic growth. The personal savings rate in the United States soared to 32.2% in April, a record high; although it fell to 23.2% in May, it is still at a very high level economic recovery.

Other scholars pointed out that the government’s current subsidy measures for unemployed workers will end at the end of July, when this benefit will at least partially shrink, and the public may begin to increase savings again.

As for inflation, they believe that even rising inflation is only a temporary phenomenon, because rising inflation requires some structural changes, and this condition is not currently available. Furthermore, if the epidemic frequently increases intermittently, it may change the long-term behavior patterns of consumers; even if the epidemic ends, the consumer confidence of American households will remain low, thereby increasing preventive savings and dragging down the pace of economic recovery economic recovery.

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Americans hold the key to a huge cash economic recovery
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