Stimulus Impact Peaked in May

At least by one measure it did. The government added $300 to the checks of Social Security beneficiaries in May. This was a big contributor to the $165 billion jump in the annual rate of government transfer payments between April and May. This rate in turn fell by $130 billion between May and June. This should have been a big item in the discussion of the data on personal income and spending released by the Commerce Department in June. This payment likely boosted consumption expenditures in May and June and will probably continue to have some impact through the summer. However, by fall the impact of this component of the stimulus will have largely faded. While the impact of other components of the stimulus, most notably the infrastructure spending, will increase through the summer and fall, the impact of other components, like the Social Security payments, have already peaked. Those expecting a large further boost from the stimulus will be disappointed.

--Dean Baker