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Friday, September 10, 2010

Households’ Balance Sheets and the Recovery

This is why I still think tax cuts need to be part of a recovery package, and that it's okay if those tax cuts are saved:

[full-sized version]

Quite a bit more on this here: Households’ Balance Sheets and the Recovery, CBS MoneyWatch.

Update: After posting this, I realized I should have said something about distributional issues, and it's coming up in comments. The point that the problem is largest for the middle class and blow is hinted at in the last paragraph of the quote from the original Cleveland Fed article, but I didn't make it explicit enough. I was intending to update the post to include this, but fortunately Mike Rorty covers this issue in a follow-up post to this one, so let me send you there: The Distribution of Households’ Balance Sheets and the Recovery.

    Posted by on Friday, September 10, 2010 at 11:51 AM in Economics, Financial System, Fiscal Policy, Saving, Taxes | Permalink  Comments (64)


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