the US recovery is highly likely severely overestimated

On January 31, 2021, I published an accurate estimate of the actual GDP fall in the USA  - 21.7%.  This estimate was based on a simple quantitative analysis that most of the money in the government 2.5 trillion bill was poured into the economy and counted as if it came from economic activity. In reality, this money was just (electronically) printed (e.g. compensation to employees was dropped severely as a reaction to the fall in economic activity). The estimate of actual GDP growth is simple if one extracts the bill money and actual fall in economic activity – 3.5% of the nominal GDP. The original 22% is likely overestimates but the fall is definitely below 15%.

One of the features revealing the great fraud was an outstanding growth in the personal income (PI), which was 1.05 of the GDP in Q2. This means that the economy generated more income than products and services. Figure 1 presents the ratio of PI and GDP, which includes also the 2021Q1. This makes me write this post. The new helicopter money injection in 2021Q1 has the same effect on the PI as in 2020Q2. This money has the same path to the GRP through “government social benefits to persons” and we not subtracted from the GDP.

The PI/GDP curve in Figure 1 is again above 1.0 indicating that the trick played in 2020 is in use again. The new 6.5% growth in 2021Q1 is overestimated by the volume of printed money – seems to be 2 trillion and thus the real GDP fell by around 4% in 2021Q1 and the nominal GDP by 7%. The most important message is that the US economy in a deep economic crisis in the first quarter. The recovery does not go well and the helicopter money allows hiding the actual fall by double counting. The last two quarters of 2020 demonstrated some optimism in an economic recovery but the Biden administration failed to support the recovery.  

Figure 1. PI/GDP ratio. 

Figure 2. Ratios revealing the printed money transfer from the government to personal income.