The better than expected jobs figures for June is already sparking talk of pulling back government aid for the economy.
That would be premature.
Enhanced unemployment benefits, direct grants to taxpayers, and the Paycheck Protection Program played a strong role in support income, spending, and employment. Allowing them to run off or expire now would risk creating conditions for a new crash in employment.
Consider enhanced unemployment. There are currently 19,290,000 Americans receiving unemployment benefits. Allowing the federal government’s $600 weekly enhancement to expire would reduce household income by around $46.3 billion a month. That amounts to an annualized rate of over half a trillion dollars of income sucked out of the part of the economy that is most likely to spend it.
While the economy is adding back jobs at a record pace, nearly one and half million Americans continue to lose their jobs each week. That’s twice the pre-coronavirus all-time record. This heightened level of job insecurity will dampen spending by those who are still working or have found new work, because they will attempt to save more in advance of a possible loss of income. Enhanced unemployment benefits help combat this because incomes don’t fall by as