President Donald Trump’s decision to suspend pandemic relief just before Christmas threatens to cause difficulties for millions of people awaiting unemployment insurance and stimulus checks, further damaging the already unstable economy.
Trump’s The reluctance to sign a $ 900 billion bipartisan stimulus package that Congress passed on Monday, along with its push for a new one, comes at a time when the special unemployment pandemic benefits are about to expire for up to 14 millions of people. The funds were included in an expense account that would also put a government at risk close if not signed into law, with millions of contractor positions at stake.
It can take up to a month for people to receive their funds and even later for the effects to seep into the economy, according to Michael Englund, chief economist at Action Economics LLC.
In addition to the short-term impact, the lack of immediate direct payments and the gap in special unemployment benefits threaten to deepen the economic scars marked especially by a jump in long-term unemployment.
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“There will be a kind of tightening in December,” said Englund by phone. “A lot of people are probably counting on checks coming out in the last week of December.”
In the meantime, “people are cutting their savings” and additional curfews and closures will particularly affect the service sector, said Englund.
Even as House Speaker Nancy Pelosi plans to vote on December 28 on a bill to increase the size of stimulus checks to the $ 2,000 demanded by Trump, she asked the president to sign the bill now. approved by Congress that has additional financial aid, including forgivable small business loans, supplementary unemployment benefits, support for tenants facing eviction and funds for vaccine distribution.
The delay – even if it ends up being only a few days – could hardly come at a worse time. Consumer spending and income fell more than analysts expected in November, while other data indicate that Americans are depleting your savings accounts, including past benefit money.
Trump still has several days to sign or veto the bill, which was passed by margins wide enough that Congress could override his veto, unless dozens of Republicans changed their vote to avoid running into the president.
Meanwhile, 803,000 Americans filed for state unemployment insurance last week, still almost quadrupling the pre-pandemic level. Even booming housing market activity is cooling, as home sales fell last month despite mortgage rates on record casualties.
Nearly 4 million Americans have been unemployed for more than six months, and research has shown that it becomes more difficult to get a job and these people are more likely to take low-paying jobs, reducing their spending and future opportunities.
The assault “adds insult to injury at a time when people are losing checks and are already living off the smoke,” according to Diane Swonk, chief economist at Grant Thornton LLP. “This is huge. There are 14 million people falling off a cliff. “
– With the help of Anna Edgerton