An artificial recovery?

March 7, 2011

IBD’s Jed Graham shows what’s supporting consumer spending these days:

Three props to personal income — higher social insurance benefits, lower tax payments and higher government wages and benefits — are adding just shy of $1 trillion to personal income on an annualized basis relative to pre-recession levels.

Those government supports account for the entire $932 billion, or 8.7%, increase in personal disposable income — and then some — since the start of the recession. In other words, government income props, mostly deficit-financed, have paid for all the gains in personal spending and saving.

ibd1

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Wait. What? Now you don’t want tax cuts?

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