While I would have been okay with being wrong... as I predicted on August 1, 2020 ...
"Already, there are signs of consumer stress from the loss of $600 in extra unemployment aid last month. Those benefits, directed by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, provided income worth $1.2 trillion on an annualized basis, according to Oxford Economics. Without that aid, personal income will decline 5%, or below pre-pandemic levels, its economists said last month. ... Expect more pain ahead, economists are warning. ... "President Donald Trump's executive orders are providing even less relief to households than initially expected in the absence of a more comprehensive fiscal aid package," Oxford Economics Lead Economist Nancy Vanden Houten said in a research note. "The steep decline in federal support for unemployed workers and heightened uncertainty will depress consumer confidence and spending."" - Microsoft News
Image by PublicDomainPictures from Pixabay
What Is Pandemic Unemployment Assistance?
To summarize, people receiving unemployment have been receiving an extra $600 per week on top of the existing unemployment benefit each week - which is a minimum of $189 and goes up based on income = or $789 + per week - since the start of the pandemic.
The program providing this is referred to as pandemic unemployment assistance, or PUA for short.
PUA is an unemployment benefit that's only available during times of emergency, in this case, the coronavirus pandemic.
Some Boring but Important US Economic Stats
- In the US, over 14.7 million people were unemployed and getting this benefit as of June 2020, according to The Balance.
- Using the 14.7 million figure and minimum of $189 base, that means over $11,598,300,000 PER WEEK has been dropping into the US economy.
- Even more significant than the huge amount of cash being distributed is the fact that this amount has been put directly into the hands of the people who are most likely to spend it quickly - and the economy STILL dropped by almost 33-percent.
- An almost thirty-three percent drop in one quarter is the fastest drop in the history of this country.
Looking at those statistics, my question is: Since the economy is collapsing at a record rate - far beyond even that of the Great Depression, with over $11.5 billion being dumped into it each week: What is going to happen to the economy when the effect of that weekly PUA benefit ending takes over the economy?
He Said, She Said and Pointing Fingers
The Democrats threw out the first pitch and the Republicans basically said, "Meh... Whatever..." and let the ball drop.
- So, going back a bit to fill in details, the Democratic House put together a proposal - the HEROES Act - over 10 weeks ago (as of August 1, 2020) to keep the PUA benefit going as well as several other vital economic factors, though the Republican Senate refused to consider it at all, saying things like the PUA encouraged people to not work.
This is a good point about people wanting to make the higher amount of money, even by being off work, however, it misses the most important points:
- Point One - there's a global pandemic taking lives of people of all ages, leaving a wide swath of devastation, and many, many jobs are simply gone forever, and
- Point Two - some unemployed people are getting and spending far more money than they normally would, and even increased spending isn't stopping or really even slowing the collapse of the US economy!
This past week, the Republicans finally grudgingly threw the ball, back to the Democrats.
So, the Republican's refused to even negotiate for over 10 weeks, until this past week, when they threw a cobbled-together proposal - the HEALS Act - out offering a lower PUA benefit.
This was new partisan proposal promptly dismissed by the Democratic House as being far too small to help the American people, so the Republicans pointed to the Democrats' unwillingness to accept the relatively insignificant piecemeal plan proposed by the Republicans, suggesting the Democrats are at fault.
- However, the Republican finger pointing is pointless because they have had over 10 weeks to begin negotiations and refused to even consider how to slow or prevent the collapsing of the economy that was only just barely bolstered by PUA benefits - - up until yesterday.
Using non-partisan thinking and simple logic - the thing is, all of the 'he said, she said' and Republican finger pointing is irrelevant - it's just a distraction from the real problem or problems:
- Mainly, the economy is collapsing in spite of massive amounts of money being dumped into it and the ending extended PUA benefits are going to bring things quickly to a head.
Bringing the Economic Stats to the Local Area
Using the Ohio numbers to bring in a more local aspect, according to Cleveland.com, Ohio's jobless numbers held steady at 423,452 for the week ending on July 25, 2020.
- So, going back to the $789 minimum PUA unemployment benefit each person on unemployment received, that amounted to $334,103,628+ per week entering the Ohio economy.
As of May 2020, the Ohio economy was facing a $777 million shortfall, and that was with the $334,103,628+ per week being dumped into it. In response to the shortfall, Governor DeWine began looking at major budget cuts to programs that benefit the poor and elderly and education.
- Going back again to pandemic unemployment assistance and the economy, since that's what this essay is about, my projections for the local economy when the PUA benefit is no longer flowing into the economy, are a bit dire just like my nationwide economic predictions.
Obviously, the extended unemployment benefits can't flow into the economy endlessly, however, the money is a lifeline - not only for the individuals receiving it but also for the economy as a whole, which affects every single person in the state and the country.
- And, it's a lifeline that's barely keeping the sinking economy afloat, so it technically should remain in force until the pandemic is over, or until the virus is under control - however long that takes.
As someone who enjoys the subject of economics, and who took every economics course available in college while also reading economics books for fun (I still do that) - I'm first to say I have no claim to be an expert on this topic, though I do believe I have a solid understanding of how economics work - both in regard to the soft science of economic theory and the more-concrete topic of economic history.
So, what's the answer?
I'm not proposing one, though I encourage CIVIL, non-partisan discussion about the topic in the comments here on Galionite or on the Galionite Facebook page. I have no clout in the greater scheme of things, so suggesting a solution would be a waste of energy. I'm just a writer who's managing a small blog about Galion in my spare time.
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