Great theory on your part, not true though. The upsurge in our business had nothing to do with the stimulus checks. It had to do with the fact, that our customers, who are largely very high income individuals stuck at home, decided that their homes needed a “makeover”. A few decided that if they were going to work from home, they needed a bigger home! And about 20% of our business last year came from people who told us they decided taxes in California were becoming unbearable and engaged us to fix up their home for sale and they subsequently moved to Texas, Idaho, Nevada, and Arizona among other places.
Our business began to surge long before the first stimulus check was issued or even promised. No doubt government spending had some incremental impact on the economy as a whole, but not in the way you seem to describe on our business and customers.
We will end up paying additional taxes because we made nearly twice as much income as in previous years and since the tax code is “progressive” it will be more than twice as much.
While our business is not huge, it does provides significant work to a large array of contractors and small business owners (we probably make up 10–40% of their total volume). Most of whom are middle class shopkeepers and tradesmen including painters, landscapers, plumbers, and electricians. So this is a case where the “trickle down” economics does occur year in and year out unrelated to tax policy.
So the money in this instance is largely flowing from high income and people with substantial accumulated wealth down towards middle class tradesmen. The combination of Covid and near zero percent interest rates created the perfect storm for the construction industry.
As an aside, I was not opposed to stimulus checks and Trump was right on the money trying to get money to those who needed help and it was a shame that Pelosi played games with the final check in order to hurt his re election chance, delaying it and causing unnecessary pain to those that truly needed help. But that’s Democratic politics for you.
There is an important role government can play in tragedies… but given government is not made of money (though they do seem to own printing press which are the next best thing), it would have made far more sense to target twice as much money to those individuals truly hurt by the pandemic rather than peanut butter it.
Doing what they did, they have set off inflation (running now 4–5%). What that means is someone earning $50K a year has seen a drop in the purchasing power of their income of $2K a year most. If you do the grocery shopping then you know how much food prices have surged.
But since most of the inflation has been in food and energy, it disproportionately hurts the poor, meaning they are getting taxed for their stimulus checks… had the total stimulus bill been much smaller and more targeted, the effect would have been greater to those in need both on the income side and lower on the inflation side.
Having lived through the 70s… inflation ravages the poor and the elderly… let’s hope this sudden wave of government induced inflation subsides by the end of this year for the sake of the poor and elderly.
