A Record 34% Of All Household Income In The US Now Comes From The Government

Following today's release of the latest Personal Income and Spending data, Wall Street was predictably focused on the changes in these two key series, which showed a modest jump in personal spending, which however was dwarfed by a record surge in personal income, to be expected in the month when Biden's latest $1.9 trillion stimmy hit.

But while the change in the headline data was notable, what was far more remarkable was data showing just how increasingly more reliant on the US government the population has become.

We are referring, of course, to Personal Current Transfer payments which are essentially government sourced income such as unemployment benefits, welfare checks, and so on. In March, this number exploded to a mind-blowing $8.1 trillion annualized, which was not only double the $4.1 trillion from February, but was also $5 trillion above the pre-Covid trend where transfer receipts were approximately $3.2 trillion.

This means that excluding the $8.1 trillion surge in govt transfers, personal income excluding government handouts would be virtually unchanged from a year ago level at $16TN.

In longer-term context, one can see the creeping impact of government payments, shown in red below.

This, as noted earlier, was due to the latest round of government stimulus checks hitting personal accounts which in turn helped double the savings rate to a whopping 27.6% from 13.6% in February.

Stated simply, what all this means is that the government remains responsible for a third of all income, or 33.8 to be precise!



Putting that number in perspective, in the 1950s and 1960s, transfer payment were around 7%. This number rose in the low teens starting in the mid-1970s (right after the Nixon Shock ended Bretton-Woods and closed the gold window). The number then jumped again after the financial crisis, spiking to the high teens. And now, the coronavirus has officially sent this number to a record 34%!

And that's how creeping banana republic socialism comes at you: first slowly, then fast.

So for all those who claim that the Fed is now (and has been for the past decade) subsidizing the 1%, that's true, but with every passing month, the government is also funding the daily life of an ever greater portion of America's poorest social segments.

Who ends up paying for both?

Why the middle class of course, where the dollar debasement on one side, and the insane debt accumulation on the other, mean that millions of Americans content to work 9-5, pay their taxes, and generally keep their mouth shut as others are burning everything down and tearing down statues, are now doomed.

The "good" news? As we reported last November, the US middle class won't have to suffer this pain for much longer, because while the US has one one of the highest median incomes in the entire world, with only three countries boasting a higher income, it is who gets to collect this money that is the major problem, because as the chart also shows, with just a 50% share of the population in middle-income households, the US is now in the same category as such "banana republics" as Turkey, China and, drumroll,... Russia.

What is just as stunning: according to the OECD, more than half of the countries in question have a more vibrant middle class than the US.

So the next time someone abuses the popular phrase "they hate us for our [fill in the blank]", perhaps it's time to counter that "they" may not "hate" us at all, but rather are making fun of what has slowly but surely become the world's biggest banana republic?

And as we concluded last year, "it has not Russia, nor China, nor any other enemy, foreign or domestic, to blame... except for one: the Federal Reserve Bank of the United States."

https://www.zerohedge.com/econ...now-comes-government

I think all of this is mostly talking about cashflows and wages and such.

Who knows how much capital investments (ie - costs to start a business), goodwill, inventory, skills/knowledge (for service businesses), have been lost and now gone from the market?

All not in the name of some silly virus. But in quest of building tyrannical power. This was never about the virus. This is about tyranny.

Not to mention that the Govt. creates zero wealth. All the money that you "get" from Govt. is money that they have already taken from you in the form of taxes, fees, etc. or, in the case of deficit spending, intend to take from you in the future.

What's that old saying? First thing to do is to stop digging! Instead, they're bringing in the biggest backhoe they can find.

Bread and Circuses for the masses.

Simply about control, if the government pays you, then you won't go against the government...

quote:

Originally posted by architect:
Not to mention that the Govt. creates zero wealth. All the money that you "get" from Govt. is money that they have already taken from you in the form of taxes, fees, etc. or, in the case of deficit spending, intend to take from you in the future.

I don't understand why people can't seem to understand that. But then again, I've come to the conclusion that most people are just plain stupid.

It's like the government takes money out of your right pocket, takes a sizeable cut, then puts what's left in your left pocket, and somehow convinces you that you have more money...

quote:

Originally posted by HRK:
Simply about control, if the government pays you, then you won't go against the government...

It's another form of slavery.

You don't bite the hand that feeds you.

The fruits of over a century of very patient leftist infiltration. The pieces were all in place in 2016, waiting for Hilary's ascension. When it didn't happen, we've seen how well they took it.

Well, I give about 34% to the government. Maybe more if I count all the property and gas tax, etc.

9% state income tax really takes a bite.

quote:

Originally posted by Edmond:

quote:

Originally posted by architect:
Not to mention that the Govt. creates zero wealth. All the money that you "get" from Govt. is money that they have already taken from you in the form of taxes, fees, etc. or, in the case of deficit spending, intend to take from you in the future.

I don't understand why people can't seem to understand that. But then again, I've come to the conclusion that most people are just plain stupid.

It's like the government takes money out of your right pocket, takes a sizeable cut, then puts what's left in your left pocket, and somehow convinces you that you have more money...

It's pretty simple, those receiving the benefits don't pay much, or any taxes.

I've said it before: I'm in a WORLD of hurt if the .gov goes under.

100% of my income comes from the government. Military retirement, my SS, wife's SS.

This message has been edited. Last edited by: PHPaul,

Looks like it's all going according to plan.

I’ll correct the headline:

‘34% of all household income in the US now redistributed from people who work and pay taxes”