The Labor Department reported Thursday that another 1.3 million people filed for unemployment last week for the first time. Around 14 million jobless workers are now getting an extra $600 a week in benefits. That was part of the CARES Act, passed earlier this year.
But that additional money is set to end in a couple of weeks. A new study out Thursday from the JPMorgan Chase Institute looks at how the unemployed are spending that extra cash — and what would happen without it.
Fiona Greig wanted to know what was happening to the extra $600 a week unemployed workers are getting. Greig is director of consumer research at the JPMorgan Chase Institute, a think tank affiliated with the bank. Normally, Greig said, jobless workers receiving unemployment cut their spending by around 7%. So that’s what she was expecting. But she was wrong. Very wrong.
“What’s really surprising about this is we’re seeing their spending soar,” Greig said. “It’s soaring by about 10%.”
The study used JPMorgan Chase account data for about 61,000 anonymous households receiving unemployment. Greig said those households spent almost 73 cents of every dollar they received. Michele Evermore, with the National Employment Law Project, said that spending is keeping some sectors of the economy afloat.
“Local hardware stores, rent. I’m worried about the local housing market if the $600 disappears,” Evermore said.
The extra money is set to disappear at the end of this month, unless Congress renews it. Ernie Tedeschi, an economist at Evercore ISI, has been looking at how the entire economy would fare without it.
He said if it went away entirely, “that would be like taking out $80 billion a month in support from the economy. By the end of the year, the economy would be 2% smaller.”
Tedeschi said if Congress cut the $600 benefit in half and started giving the unemployed $300 extra a week, the economy would still contract — by 1%.
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As of now, those $600-a-week payments will stop at the end of July. For many, unemployment payments have been a lifeline, but one that is about to end, if nothing changes. The debate over whether or not to extend these benefits continues among lawmakers.
With a spike in the number of COVID-19 cases, are restaurants and bars shutting back down?
The latest jobs report shows that 4.8 million Americans went back to work in June. More than 30% of those job gains were from bars and restaurants. But those industries are in trouble again. For example, because of the steep rise in COVID-19 cases in Texas, Gov. Greg Abbott, a Republican, increased restrictions on restaurant capacities and closed bars. It’s created a logistical nightmare.
Which businesses got Paycheck Protection Program loans?
The numbers are in — well, at least in part. The federal government has released the names of companies that received loans of $150,000 or more through the Paycheck Protection Program.
Some of the companies people are surprised got loans include Kanye West’s fashion line, Yeezy, TGI Fridays and P.F. Chang’s. The companies you might not recognize, particularly some smaller businesses, were able to hire back staff or partially reopen thanks to the loans.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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