Stimulus Checks: What Are Americans Doing With Them?

It looks like Americans are still saving and not spending . . . even with those stimulus checks.

Stimulus checks to U.S. households have primarily driven savings instead of consumption. This is according to a study published by the New York Federal Reserve’s blog. Its authors were from Liberty Street Economics.

The average share of stimulus payments that U.S. households earmarked for consumption is called the marginal propensity to consume (MPC). It stood at 29% in the first round from the $2.2 trillion Cares Act last year.

That slipped to 26% in the second round of payments from the $900 billion package passed in December. And to 25% for the latest $1.9 trillion stimulus package passed in March.

In contrast, households plan to save about 42% of the latest stimulus checks. That proportion is up from 37% for the second round of stimulus checks and about 36% when the first round of stimulus checks were issued last year.

Of course, the high savings rate should boost spending in the future. But one big question remains:  How much will be spent and how much pent-up demand is there, really?

The Big News

U.S. Vaccine Production Problem

The global scramble to produce enough Covid-19 vaccine is about to get even tougher. Drug makers and countries will need a second round of shots to combat the growing threat of virus variants. Finding vaccines that can ward off more contagious or virulent strains is only half the battle. The U.S. has virtually no capacity to manufacture revised vaccines or booster shots alongside the original versions. Setting up additional facilities could take months or even years.

What’s Holding Back U.S. Virus Tracking

Researchers fear that the U.S. is failing to ramp up genetic sequencing of SARS-CoV-2 fast enough to stay on top of dangerous variants. Labs supported by the US government have doubled the rate at which they are sequencing SARS-CoV-2 genomes over the past two months. Yet, the country is falling behind others. We have plenty of sequencers. But work is being held back by the fragmented U.S. health system and a lack of coordination between testing labs and sequencing labs.

Mothers Pass Antibodies to Their Babies

Multiple studies have shown that antibodies generated after vaccination can be passed through breast milk from mothers to babies. That offers babies against the coronavirus. However, researchers do not yet know how long such protection will last.

More Countries Ditching AstraZeneca Vaccine for Younger People 

More countries  are pausing AstraZeneca’s Covid vaccine amid warnings about rare blood clots. Among them are the UK, Spain, Italy, Belgium, Denmark, Norway, Australia and South Korea, soon. Some are suspending use for patients under 50 or banning it altogether. The vaccine has yet to be approved in the U.S. 

Covax Distributes 38.4 Million Vaccine Doses

The COVAX program says it has delivered nearly 38.4 million doses of Covid-19 vaccines to more than 100 countries across six continents as of Thursday. This is just six weeks after it began to roll out supplies. The WHO program expects to deliver doses to all economies that have requested them in the first half of 2021.

The Coronavirus Numbers

Here are the numbers from Friday at 8 a.m. ET from Johns Hopkins University:

  • 134,038,180 Infected Worldwide
  • 710,909,553 Vaccines Given Globally
  • 2,904,554 Deaths
  • 31,003,070 Infected in the U.S.
  • 174,879,716 U.S. Vaccine Doses Administered
  • 560,115 Deaths in the U.S.

What’s Next

It was a positive session on Wall Street again. The Dow inched up thanks chiefly to Apple’s almost 2% gain. The S&P 500 rose over 0.4% to set a record closing high for the second day in a row. The Nasdaq added more than 1% as Amazon, Netflix, Microsoft and Alphabet all rallied.

U.S. stock markets were poised to end a record-setting week on a steady footing. It’s supported by bond market tranquility, as investors bank on an economic recovery from Covid-19.

The fact that Treasury yields have stopped rising is very important. It removes a headwind for equity markets.

Finally, market darling Tesla Motors rose almost 2% as Morgan Stanley said the company is set to benefit from President Biden’s plans to spend massively on developing America’s electric vehicle ecosystem. Investors, they said, “face greater risk not owning Tesla shares in their portfolio than owning Tesla shares in their portfolio.”

Yours in Health & Wealth,

Tony Daltorio

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