[h=1]U.S. savings rate hits record 33% as coronavirus causes Americans to stockpile cash, curb spending[/h]https://www.cnbc.com/2020/05/29/us-...mericans-to-stockpile-cash-curb-spending.html
U.S. savings rate hits record 33%
- Thread starter TheStateUofMS
- Start date
There's a bear case and a bull case to be made. I always say things won't be as bad as they appear nor will be they as good as they appear. It's really simple and sounds kind of silly, but it's true 95% of the time.
I think we'll be somewhere in the middle. I initially thought 20% smaller economy a year from now. I'm thinking probably closer to 0-10% smaller a year out. With 0% interest rates for the foreseeable future, the market can live with this reality I think.
It's likely to be volatile. Re-balance your accounts every few months if the allocation gets out of whack (add to stocks if stocks fall a lot; sell some stocks if they rise a lot; A.K.A. stay properly allocated) , stick to your plan and don't take on too much risk. There will be some bargains created and there will be some value traps created as well.
I think we'll be somewhere in the middle. I initially thought 20% smaller economy a year from now. I'm thinking probably closer to 0-10% smaller a year out. With 0% interest rates for the foreseeable future, the market can live with this reality I think.
It's likely to be volatile. Re-balance your accounts every few months if the allocation gets out of whack (add to stocks if stocks fall a lot; sell some stocks if they rise a lot; A.K.A. stay properly allocated) , stick to your plan and don't take on too much risk. There will be some bargains created and there will be some value traps created as well.
I tend to think that people won't be that scarred and they will come out blowing and going. People don't save as much as they should, which is bad in the long run and makes the economy more volatile in the short run, but the plus side of that is that even if there are a lot of good reasons for them to change their behavior coming out of lock down, I think you'll see people acting like the extra savings is burning a hole in their pocket which will give us a good sharp boot in the second half of this year. That would be consistent with how the economy has recovered after previous pandemics and epidemics, but of course we've never had the government shut down the economy the way they have, so maybe this time will be different.
Agreed.
Gotta give US citizens credit. We want to live our lives and we're not gonna let a 1-2% mortality rate disease (much much lower nearly .01% for non elderly healthy folks) control how we live.
Gotta give US citizens credit. We want to live our lives and we're not gonna let a 1-2% mortality rate disease (much much lower nearly .01% for non elderly healthy folks) control how we live.
^^^This^^^^
Our public officials screwed a lot of people and landlords by announcing that they wouldn't shut off utilities or allow evictions. No reason to do that with the unemployment available the way it was. A lot of people skipped on utilities and rent and just dug themselves into a hole. The rent I get. They can just skip out and move on to the next apartment and a lot of them constantly have their wages garnished to the max, so another garnishment doesn't matter to them. But the utilities is stupid. They are going to have to repay those to stay in their current location or they are going ot have to move to a different provider to get a new hookup.
CDC's best estimate now is that the mortality rate for infected people with symptoms is .4%. That includes the elderly and unhealthy. Look at the young and healthy and include the asymptomatic people, and the IFR is presumably a lot lower.
During really cold periods and hot periods it is illegal for utility companies to turn off power and gas. People was already taking the advantage of that. They know how to deal with it. As far as rent and mortgage goes it is really hard to evict someone. You have to go through a lot of hoops. Most are willing to work with the people who live in those houses. It's not like you walk in and say get out. It is a long and costly process.
I know I was trying to be conservative to prevent folks from screaming at me "this is not a bad flu!"
That's true. Short term pain. Again, I keep saying over and over I think (I could be wrong) we ended this lock down nonsense just in the nick of time. 1 month of non payment isn't going to ruin things for the long term. I think landlords and creditors will get more aggressive on folks who can afford to pay but have chosen not to.
I'm not extremely up to date on what exactly CA, NY, NJ, PA, WA and IL are doing in this regard, but I hear they are still pretty draconian. Those combined are an enormous part of the US economy as well. They may be the wild cards in the US's recovery.
I'm not extremely up to date on what exactly CA, NY, NJ, PA, WA and IL are doing in this regard, but I hear they are still pretty draconian. Those combined are an enormous part of the US economy as well. They may be the wild cards in the US's recovery.
Yea, had some idiot accuse me of making up numbers when I used numbers squarely within the range of uncertainty of numbers he was citing in addition to being supported by studies from stanford and other places, and that the CDC's best estimate now falls within. People are oddly invested in the doomsday scenarios that came out originally. I feel like most people who started off with "it's a bad flu" came around to the data, although now they may be back to "it's a bad flu" as the estimates of the IFR have come down.
i liked Cuban's idea to tie any stimulus payments to "use it or lose it" debit cards. it forces people to spend it or lose it...helps the people, helps the economy. my check came in and it went immediately into some of the beaten-down financial and entertainment stocks and its been a pretty solid move. give me another check, and ill do the same....give me a debit card and im gonna go spend it before it expires.
For anyone that has disposable income, getting a debit card won't necessarily inject that money into the economy.
If we get $3k on a debit card, we will ust stop using money from our accounts to buy groceries, gas(what little is used), clothes, etc etc. Instead, we will use the debit card. Our usually earmarked money could either then just sit in our accounts or be pulled out and invested.
Its effectively the same result as if we got $3k in cash and could do what we want with it.
...maybe I misunderstand the premise, but a debit card doesn't mean more money spent by those who aren't in dire need of money.
The thing that needs to happen is take all of the money from unemployment and stimulus and give it to employers, starting in July. But they must hire new workers to replace any that left... everywhere I go now has help wanted signs in the windows. Big companies and small.
It was a mistake not doing what the UK did and running the money through every employer. We are going to have a big percentage of people who could go back to work that won't. Some may have legitimate healthcare concerns. But many will use any excuse they can to stay home and get free money. We are going to crush this economy for a decade if we don't motivate that 68% of people who are making more money on unemployment to go back to work soon. How long until it becomes an entitlement instead of a bandaid?
If we do another round of direct payments and extend unemployment benefits, it's going to turn temporary unemployment into a long term problem. It also doesn't address people who are still working and took pay cuts. This thing is far from over... It's now about fiscal policy as much or more than public health policy.
It was a mistake not doing what the UK did and running the money through every employer. We are going to have a big percentage of people who could go back to work that won't. Some may have legitimate healthcare concerns. But many will use any excuse they can to stay home and get free money. We are going to crush this economy for a decade if we don't motivate that 68% of people who are making more money on unemployment to go back to work soon. How long until it becomes an entitlement instead of a bandaid?
If we do another round of direct payments and extend unemployment benefits, it's going to turn temporary unemployment into a long term problem. It also doesn't address people who are still working and took pay cuts. This thing is far from over... It's now about fiscal policy as much or more than public health policy.
i disagree. ill let him explain it.
https://finance.yahoo.com/news/mark...t-card-as-coronavirus-stimulus-135928871.html
https://finance.yahoo.com/news/mark...t-card-as-coronavirus-stimulus-135928871.html
It says you should not give money to people who don't need it. The people that need it most are employers... If they don't survive, it will take years to regain full employment. We carpet bombed the first round. Now it's time to use a surgical approach.
I know several people that had too much income in 2018 to qualify for stimulus that are commissioned sales reps. They are hurting. One guy just texted me, he is taking out a home equity loan and the first appraisal came in too low and the second one just came in where he needed.
Another guy only has a base of $35k. He sells capital equipment into the Midwest. All of his OEM's were shuttered and have cut capex. He is projecting a 50-60% decline in income for the year. His sister-in-law and husband both were restaurant workers and took severances and are now getting stimulus and unemployment.
The I in-laws combined for about $5k gross per month before the pandemic. Early 30's and no kids. Now they are getting $8k per month and with severances and stimulus, racked up an extra $6k in April. My friend was making $12k per month on average and is now in the $5-6k range with zero assistance. He has 4 kids and a stay at home wife who quit her job last fall after having twins. Her income plus his last year , put them over the limit for stimulus. He is looking at selling his house and moving to an apartment in a few months possibly.
($145k is great money, but in a major metro area, it gets real expensive. It would feel like $80-$100k in the Jackson area. Enough to live comfortably, but when that gets cut in half... It's a big problem.)
That article doesn't refute my very realistic scenario that shows this idea is quite flawed.
I'm not saying I disagree with the idea, sure- toss it on a debit card instead of direct depositing it into my bank. Sounds fine to have it dispersed in that form. But it won't make my household spend more.
Instead of me using my bank card, I'll just use this debit card. My bank account will effectively grow and I will have spent no more actual money.
You disagree, and yet you don't show how my interpretation of what he said is incorrect and you don't address my very realistic scenario that negates the intent of Cuban's idea.
Again though, I'm not saying I disagree with the idea(therefore I am not saying 'shut it down'). I simply don't see it playing out in as idyllic a way as Cuban envisions.
****, let's do it. Print the 17 out of some cards and send em out to all. This pandemic is only further solidifying the haves and extebding the divide to the have nots, so sure why the **** not do this. I'll take some free money and one day tell my grandkids to suck it up and pay it back.
...i just won't end up spending any more than I already would have which defeats the intended purpose.
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