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Illustration: Aïda Amer/Axios

Most Americans are doing surprisingly well, financially, in the face of a major pandemic raging across the country.

Why it matters: The health of the U.S. consumer is one of the main reasons why a second stimulus is perceived to be much less urgent than the first one was.

Where it stands: Don’t hold your breath for another stimulus deal before President-elect Biden takes office. Congress is on recess next week, and is only in session for another few weeks before breaking again for the December holidays, Axios' Alayna Treene reports.

  • That leaves precious little time to get anything passed before the end of the year. Most lawmakers admit there’s a slim chance both parties reach a compromise on a comprehensive COVID relief bill before Biden is sworn in.
  • There’s a greater chance that some provisions get tied to a government funding deal, which must pass before the end of the year to avoid a shutdown, but substantial negotiations have yet to take place.

By the numbers: Americans' disposable income was $15.7 trillion per year in September, up significantly from its pre-crisis level. Average earnings are $29.50 per hour, up from $28.69 in March.

  • The total amount borrowed has fallen, partly because Americans managed to save 14.3% of their income in September. That's roughly double the pre-crisis savings rate. And credit card balances are plunging.
  • Bloomberg summed up the data last week, under the headline "The American Consumer Is Flush With Cash After Paying Down Debt." Bonds backed by consumer debt are more expensive now than they were pre-crisis.

What they're saying: “The consumer has clearly come back," says Steve Sadove, Mastercard Senior Advisor and a former CEO of Saks. "Early on, the stimulus had a big effect on the consumer, especially the lower-end consumer. As we've gone into the latter parts of the recovery, higher-income consumers are starting to spend again.”

The other side: Not all Americans are doing well. Millions are unemployed and going hungry, and vital crisis-era benefits are scheduled to expire at Christmas.

  • The broad economy remains well below potential, and won't return to its pre-crisis level any time soon. Many sectors, including hospitality, travel, and state and local government, are struggling mightily with no real light at the end of the tunnel.

The bottom line: A second round of stimulus is by no means assured. But if it happens, expect the bulk of the money to go to small businesses, other companies hit hard by the pandemic, and the unemployed.

Go deeper

Dion Rabouin, author of Markets
Updated Dec 3, 2020 - Economy & Business

Our make-believe economy is here to stay

Illustration: Eniola Odetunde/Axios

The Federal Reserve and global central banks are remaking the world's economy in an effort to save it, but have created something of a monster.

Why it matters: The Fed-driven economy relies on the creation of trillions of dollars — literally out of thin air — that are used to purchase bonds and push money into a pandemic-ravaged economy that has long been dependent on free cash and is only growing more addicted.

Dec 4, 2020 - Politics & Policy

Thursday night frights for Biden White House

Reproduced from Homebase; Chart: Axios Visuals 

President-elect Joe Biden is building an economic team to deal with a post-COVID economic free fall, and a jobs report coming out Friday — expected to show reduced hiring last month — is anticipated to give that group a preview of coming attractions.

Why it matters: Biden's economic advisers are worried any failure to inject money into the economy now will only multiply their challenges once they take office, but President Trump remains fixated on litigating his election loss.

Dion Rabouin, author of Markets
22 hours ago - Politics & Policy

America's hidden depression

Biden introduces his pick for Treasury secretary, Janet Yellen, on Dec. 1. Photo: Alex Wong/Getty Images

President-elect Biden faces a fragile recovery that could easily fall apart, as the economy remains in worse shape than most people think.

Why it matters: There is a recovery happening. But it's helping some people immensely and others not at all. And it's that second part that poses a massive risk to the Biden-Harris administration's chance of success.

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