The Economy & the Fed

Transfer Payments (Government Benefits)

Money the government pays to people without asking for work or goods in return: Social Security, Medicare and Medicaid, veterans’ benefits and unemployment insurance. In the personal income report they are about a fifth of all income, and they move on their own rules: Social Security rises each January with its cost-of-living adjustment, and jobless benefits climb when layoffs do. That makes them an automatic stabilizer, money that keeps flowing into households in a downturn without any new law being passed.

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