June 29th, 2020
Federal Unemployment Benefits May Expire Soon
Larry Kudlow, a senior economic adviser to President Trump, advises lawmakers to replace the $600 a week unemployment benefit with a smaller return to work bonus, noting unemployment benefits might be discouraging Americans from returning to work.
The CARES Act, which included a $2.2 trillion relief package and was inacted in March, increased unemployment benefits by including $600 in addition to the benefits from states. The benefits are now set to expire on July 31st. Economists at the University of Chicago estimate more than two-thirds of Americans on unemployment insurance are making more than they originally did at work. Increased earnings coupled with the ability to stay safe and healthy when quarantining at home are making it difficult for some to consider entering back into the workforce.
In the coming weeks, Lawmakers will discuss additional legislation regarding the economic crisis. While Democrats are interested in expanding funding for unemployment payments, other officials have raised questions on if it would interfere with economic recovery.
Prior to COVID-19, U.S. consumers had reached an all-time high for credit card debt. In addition, the auto industry had its highest levels of 90-day delinquencies since 2008. These factors, along with historical trends, lead many to believe that a spike in bankruptcies could occur, once COVID-19 assistance concludes.
AIS will continue to monitor the COVID-19 impact on the U.S. economy and provide insights and updates on a regular basis.