The US government's stimulus is pushing money into Americans' pocketbooks with gusto.
Just as total wages and salaries in May swooned to their lowest level in nearly two years, Americans got a timely boost from Uncle Sam: a record $2.24 trillion in government benefits (calculated at an annual rate), the Commerce Department reported Friday. Those government transfers, plus the temporary decrease in federal taxes, made disposable income soar 1.6 percent over the previous month. That was the highest monthly increase in a year.
With the extra money, consumers spent an extra 0.3 percent in May, the first monthly rise since February. Amercans' savings rate rocketed to 6.9 percent, the highest level since 1993.
But without that government help, the picture looks far less robust. Americans' disposable income rose only 0.2 percent in May – less than the 0.9 percent advance in April (when government stimulus is factored out).
Much of the rise in May's government spending was temporary, anyway. Since most of the increase in May came from onetime $250 checks to Social Security recipients, the impact of the stimulus will fade going forward.