Retail sales (excluding autos) surged by 5.3% in January 2021, easily beating expectations of 1.2% growth. This strong growth came even as some economists warned of more economic disruption and overall weakness. So what was the source of the retail sales increase? Bill Lockyer and many analysts believe stimulus checks played a major role. And Mr. Lockyer also believes more stimulus checks could prop up the economy.
“The retail sales growth in January was encouraging and hints at how effective stimulus checks can be,” Bill Lockyer says. “Some like to talk about trickle-down economics, but often trickle up is more accurate. Strong spending supports businesses big and small.”
The American economy faced many disruptions in 2020, and some measures found that the gross domestic product shrunk in the first and second quarters of the year. Bill Lockyer notes that the COVID-19 pandemic has caused many economic problems and while economic disruption was not as severe as some initially feared, we’re not out of the woods yet.
“The COVID-19 pandemic has had a direct impact on the economy, and perhaps more importantly, on income streams for many American families,” Bill Lockyer points out. “So far, the economic fallout hasn’t been as bad as some predicted, but often the economic impact of events is delayed.”
Bill Lockyer believes that we could experience more economic disruptions in the future, especially if no more stimulus checks are offered.
“Many families continue to struggle,” Bill Lockyer says. “A lot of people are behind on rent and the like. Consumer spending could dry up quickly. By putting money into the hands of average Americans, we stimulate spending. Retailers, property owners, local restaurants, and many more could enjoy the benefits of stimulus checks.”
Bill Lockyer Believes Stimulus Checks Are One Of The Best Ways To Encourage Spending
Some pundits and politicians argue that tax cuts for businesses and the wealthy offer the best way to stimulate spending. However, given the moment and the challenges faced by many Americans, the best first step, Bill Lockyer argues, is to shore up consumer spending and to offer assistance to middle and working-class families.
“I’m not necessarily against tax cuts for companies and the wealthy, every policy option should be considered closely,” Bill Lockyer says. “However, the people hurting the most right now are middle and working-class individuals and families. Direct assistance now could save lives and reduce hardship.”
The economics of such moves are also encouraging.
“Give a rich person a thousand bucks and the money might sit in a bank account,” Bill Lockyer suggests. “Give middle and working-class people that money, and it’s often spent right away, which supports businesses. Increased spending can increase economic growth. This benefits a wider swath of the population and real increases in spending can create jobs, expand wealth, and drive tax revenues.”
So while more challenges may crop up in the months ahead, wise actions now could reduce future hardships.