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Another 1.3 million people filed for unemployment benefits during the week ending July 11, adding to the tens of millions of jobless Americans receiving unemployment benefits during the pandemic: https://reut.rs/2WqeIV6
A study released today analyzing the transactions of people receiving jobless benefits shows the impact the $600 supplement is having on the unemployed.
Usually, people on unemployment benefits cut spending by 7% because regular UI payments account to a fraction of previous pay
Usually, people on unemployment benefits cut spending by 7% because regular UI payments account to a fraction of previous pay
People receiving unemployment benefits during the pandemic actually spent 10% more than they did while they were working, showing the impact of the $600 addition on households and the economy during a time of extreme unemployment: https://reut.rs/2ZvbkKt
After the pandemic hit, all households cut spending as businesses across the country shut down to slow the spread of the virus. But unemployed people started to spend more after they began receiving benefits: https://bit.ly/30fhv4t
That looks at people who got their benefits right away. Many households had to wait several weeks without pay before the unemployment benefits arrived - and some are still waiting. Those households facing long waits cut spending by 20%, suggesting a substantial hardship.
These enhanced unemployment benefits are set to expire in less than two weeks. If Congress doesn't act, millions of Americans could be pushed off a cash cliff at a time when many businesses are shutting down again because of the virus: https://reut.rs/2BOuba9
As the data shows, the loss of the $600 supplement would not bode well for consumer spending - and this is a consumer driven economy. It could also lead to a wave of delinquencies, evictions and other hardships.
