When we think about recessions, we generally don't think about a rise in personal income. But thanks to the support of governments all around the world, we might just be able to say, this time is different.
In today's chart we look at the rise and fall of personal income since 1959 (US). Generally we see a decline in personal incomes during recessions (grey bars) - 2020 is wild - we've seen personal incomes soaring over 40%. However, the US, and Australia soon faces a potential "benefits cliff" and this could be one of the defining events for global markets in the coming months.
The US provides a US$600 per week in Federal Pandemic Unemployment Compensation (FPUC), which is set to expire at the end of July, while the Pandemic Emergency Unemployment Compensation (PEUC) and Pandemic Unemployment Assistance (PUA) will also expire at the end of this year. In Australia, we'll see an end to the Job-keeper and Job-seeker benefits in September. With these benefits, we have seen a rise in consumer spending pre and post lock-downs.
We have a very important few months coming up for the economy.