Ed Yardeni | Jun 02, 2021 02:00AM ET
Just as significant, the 12-month sum of federal government’s outlays increased $2.1 trillion y/y to a record $7.3 trillion during April.
Many economists track M2 velocity, which is the ratio of nominal GDP to M2. It remains near the record lows of the past year. We prefer to track the inverse of this ratio.
The Fed’s Distributional Financial Accounts shows that liquid assets held by households jumped by $3.3 trillion from Q4-2019 through Q4-2020 to a record $15.9 trillion.
The question is: What will these households do with all that cash they've accumulated since last year? Odds are they will continue to spend it on goods and services and to invest in financial assets.
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