With pandemic relief programs set to run out for workers, a reckoning lies ahead

From today’s New York Times:

The multitrillion-dollar patchwork of federal and state programs intended to address job losses from the pandemic has not prevented tens of millions of layoffs or long lines at food banks. But it has mitigated the damage.

Now the expiration of those programs represents a looming cliff.

The $1,200 payments have already gone out to most eligible households. The lending program that helped millions of small businesses keep workers on the payroll will wind down if Congress does not extend it. And the $600 a week in extra unemployment benefits that have allowed tens of millions of laid-off workers to pay rent and buy groceries will expire at the end of July.

The economic damage wrought by the virus has been widespread. More than 40 million people — the equivalent of one out of every four American workers — have filed for unemployment benefits since mid-March. It is an astonishing tally that rivals the bleakest years of the Great Depression. And people continue to lose their jobs: the government reported Thursday that 2.1 million people had filed unemployment claims last week.

Now there are questions about how long the federal aid meant to cushion the blow will last.

Even the possibility that the programs will be allowed to expire could have economic consequences as consumers and businesses rein in spending, said Aneta Markowska, the chief financial economist for the investment bank Jefferies. “This economy is clearly going to need more support,” she said.

Economists including Jerome H. Powell, the Federal Reserve chair, have called for further action. But a partisan standoff on Capitol Hill makes it likely that any aid will be far more limited than the $3 billion package passed this month in the Democratic-controlled House.

President Trump and other Republicans have played down the need for more spending, saying the solution is for states to reopen their economies. Extending benefits, they say, could impede the recovery by giving people an incentive not to return to work.

Read the complete article here.