Pardon Me, Myth… – In her recent book, “The Deficit Myth,” Stephanie Kelton, a professor at Stony Brook University, writes about many of the common misperceptions surrounding government debt and deficits. Kelton is a proponent of Modern Monetary Theory, an approach widely rejected by academic economists, and was an advisor to Bernie Sander’s 2016 and 2020 presidential campaigns. However, her rebuff of popular deficit myths does not run counter to the mainstream view of most economists.
This Week – The 3rd estimate of 1Q20 GDP growth is expected to be little changed (-5.0% in the 2nd estimate). Durable goods orders should rebound in May, following large cancellations of aircraft orders in March and April, but watch shipments, which should give us a view of business fixed investment in 3Q20. Recovery rebate checks and deposits boosted personal income in April, even as wage income sank – we should see that reverse in May. Personal spending should have risen last month, echoing the bounce seen in retail sales.