JEPI - Why The Second Stimulus Won't Have Much Economic Impact
- While most hope more stimulus will cure the economy's ills, the "2nd derivative effect" will be problematic. Of course, since vast portions of the stimulus package went to everything but "helping out the average American," such ensures the impact will be far less.
- During Q4-2020, not much happened, as the government was fighting over the next round of stimulus. As such, spending fell back to a more normal level of increase. However, if we assume the second CARES Act checks hit by January, it would represent a roughly 8.3% increase in government spending over Q4-2020.
- As government spending grows sequentially larger, each additional round of expenditures will have less and less impact on the total.
- Given the amount of debt added to the overall system, the ongoing debt service will continue to retard economic growth.
For further details see:
Why The Second Stimulus Won't Have Much Economic Impact