Using theWall Street Journalarticle titled "Income Rise Tees Up Fast Growth" (February 27-8, 2021) as context explain whether you agree or disagree with the following statement:"The Classical view that more savings is important for generating economic growth and recovery from a recession is borne out by the U.S. experience during the Covid recession."

SATURDAY/SUNDAY, FEBRUARY 27 - 28, 2021 - VOL. CCLXXVII NO. 47 WSJ.com $5.00 2/ 27- 5 / 2 1 Income Rise Tees Up Fast Growth Aid package drives 10% in January from the previ- billion program signed into ments for many Americans. It much of the money: Household 10% gain in household ous month, the Commerce De- law in late December. That would then go to the Senate, savings totaled $3.9 trillion partment said Friday. The in- package included one-time where Democrats hope to pass last month, up from $1.4 tril- earnings; consumers crease was the second largest cash payments of $600 and a the package through a proce- lion last February. also boost spending on record, eclipsed only by special weekly unemployment dure that doesn't require votes "The levels are off the last April's gain, when the fed- benefit of $300 that the gov- from Republicans, who have charts," Joseph Brusuelas, chief eral government sent an initial ernment started sending to attacked it as too large. economist at RSM US LLP, said BY JOSH MITCHELL round of pandemic-relief pay- households. Americans last month spent of the cash reserves. "You're ments. Household income has There will likely be more a chunk of their income, going to see the fuel for a Pandemic aid to households risen 13% since February 2020, government money flowing boosting spending by 2.4%, the Please turn to page A4 is pouring money into the U.S. the month before the pan- into the economy soon. The first gain in three months. economy, priming it for rapid demic shut down large seg- Democratic-led House on Fri- Households spent broadly on . Democrats seek path on growth this year. ments of the economy. day was expected to narrowly goods, particularly long-last- minimum wage. A4 Household income-the January's increase in house- - pass a $1.9 trillion Covid-19 ing big-ticket items. Spending * Rifts emerge as House amount Americans received hold income was almost en- aid bill that would extend ad- - on services also increased for pushes ahead on relief bill.. A4 from wages, investments and tirely due to federal pandemic- ditional pandemic aid, include the first time since October. * U.S. stocks' momentum was government programs-rose relief aid included in a $900 ing $1,400 per-person pay- But households also stashed blunted this week.. B13 Household the first week of March. Saving Up ocean. And he has planned a Other pieces of the pan- trip for April to drive up to a demic law under consideration Pandemic-related aid has boosted household income, spurring second home in Oregon, visit an increase in spending and savings at the start of the year. Income in Congress would get paid out relatives in San Francisco and more gradually, including the Household spending and visit friends in Lake Tahoe. He $400-a-week supplement to income during the pandemic Personal-saving rate plans to fly back. "It will be a Surges unemployment insurance and monthly advance payments of $225 trillion 35% RECESSION full-fledged vacation that I ha- ven't taken in over a year," Mr. the child tax credit that would Molloy said. start as soon as July. 30 Such spending will help the Continued from Page One Gross domestic product fell 200 Personal economy return to its pre-pan- pretty big consumer-led boom 3.5% in 2020 compared with income demic vigor, along with addi- this year, which will spill into 2019, the Commerce Depart- 175 tional recovery in a labor mar- next." He expects the economy ment said Thursday. In a Wall 20 ket still digging out of the hole to grow 6.5% or more this year. Street Journal poll earlier this created by the pandemic. Con Job growth resumed in Jan- month, economists on average 150 15 sumer spending has held up uary after a drop in December, expected GDP to expand nearly well during the pandemic, as while some parts of the econ- 4.9% this year. 10 consumers shelled out more for omy such as construction, There are big risks that 12.5 goods, particularly long-lasting warehousing and manufacture could undermine the economic Consumer products such as cars, home ing have seen increased de- recovery. While U.S. residents spending appliances and items purchased mand. And higher-income are receiving the coronavirus 10.0 households, unable to travel or 0 online. Many people have also vaccine, it is likely to take dine out, have built up a high months for the country to 2015 '20 2007 15 upgraded their homes. The services side-restau- level of savings. reach herd immunity, medical Note: Seasonally adjusted at annual rates Sources Commerce Department rants, nail salons, gyms, air- The next round of stimulus experts say. Another resur- lines-however, continues to payments could get paid to gence in the virus could scare occurred as states and cities nior project manager for a suffer. Services spending is ex- households quickly after Presi- consumers and cause busi- ordered businesses to shut or real-estate developer in San pected to pick up this spring, dent Biden signs it into law. nesses to close or scale back. scale back again, as virus in- Diego. He started his own con- as more people get vaccinated. The Internal Revenue Service . Even when the nation does fections resurged, restricting sulting business, restoring "People are going to travel has shown over the past year reach herd immunity, many consumers' ability to spend. some but not all of his income. more," Lydia Boussour, senior that it can get the bulk of the consumers may remain fearful Also, the effects of an earlier Like most Americans, he has economist at Oxford Econom- money into bank accounts of venturing out in public, stimulus bill passed at the out- cut back on spending during ics, says. "They're going to go within a week or two after en- economists say, set of the pandemic faded. the pandemic, mostly by not back to restaurants and bars, actment. Consumer spending is the New virus infections have going out to eat or traveling, they'll go back to the gym-all On top of that, the IRS will biggest factor behind growth been declining, and several big saving $300 to $400 a month. the things they basically were be sending the regular batch of in the U.S. Spending soared in states, including California and But last week, not long af- not able to do before the pan- refunds during the tax-filing the summer, grew modestly in Texas, eased restrictions in re- ter California's governor lifted . demic. This is where you will season. Officials expect to issue early fall and then fell the final cent weeks. dining restrictions, Mr. Molloy really see a burst in spending." the first large wave of refunds two months of 2020. The de- Scott Molloy, 45 years old, went out for burgers and beer -Richard Rubin to low-income households in cline at the end of last year was laid off in August as a se- with a friend at a pub near the contributed to this article