While most Americans are hoping for the second round of stimulus checks, those currently on unemployment are concerned about their federal benefits expiring. They're not the only ones, either, as many economists are saying that a lapse in additional unemployment benefits could harm the United State's financial recovery from the ongoing coronavirus pandemic. The CARES Act offered out-of-work Americans an additional $600, on top of their state unemployment benefits, but that expired on July 31.
Trevon Logan, an economics professor at Ohio State University, spoke to the Wall Street Journal and commented on the amount of time it will take to get money to citizens after lawmakers finally settle on a new relief bill. "It could take weeks and weeks and weeks to get this money to people, which means of course they will default on a number of obligations," he said. Peter Ganong, a University of Chicago economist, added, "If we went to a world with no supplement, we'd see spending of the unemployed fall. Because there are so many unemployed people right now, that would have a really dramatic effect on the macroeconomy."
“It's going to be a mess.” Some officials say at least 23 million Americans are at risk of losing their homes now that a federal eviction moratorium expired and the extra $600 in unemployment benefits has lapsed. https://t.co/weKM2y9KOR— AP Eastern US (@APEastRegion) August 4, 2020
Mark Zandi, the chief economist at Moody's Analytics, added that the stimulus payments alone do not provide the same "economic bang for the buck" as enhanced unemployment insurance does. "UI beneficiaries spend every penny of the support very quickly on necessities that generate other economic activity and jobs," he said. According to his research data, if the payments are not resumed, it could potentially cost the economy over 1 million jobs by the end of the year. It could also boost the unemployment rate by 0.7 percentage point, and reduce gross domestic product by 1.27 percent.
Regarding the negotiations in Washington on the next bill, Senate Majority Leader Mitch McConnell has said that he is ready to support whatever bill emerges. "Wherever this thing settles between the president of the United States and his team, that have to sign it into law, and the Democrat not insignificant minority in the Senate and majority in the House, is something I'm prepared to support even if I have some problems with certain parts of it," he said, as per CNBC.