For people who depend on controls, that uncertainty is frustrating.
“I have no idea why Congress would wait until a few days before the checks run out,” said Jacob Perlman, a benefit beneficiary in Chicago. “This should have been done a month ago.”
Perlman, 26, made $ 12 an hour as a housekeeper at a gym, making him one of the millions of Americans who earn more in unemployment than they did at work. But she is eager to return to work.
“The jobs just aren’t there right now,” he said.
Mr. Perlman’s regular benefits from the state of Illinois total $ 159 per week, just enough to cover his share of the $ 500 monthly rent, and much less food or other expenses. So he is already trying to save as much as possible.
Decisions like Perlman’s to cut spending even before benefits expire, multiplied by millions of households, are a kind of uncertainty tax on the economy as a whole, cushioning the stimulating effect of payments.
“There are people on the brink of financial disaster here,” said David Wilcox, a former Federal Reserve official who is an economist at the Peterson Institute for International Economics. “We can think that Congress will most likely come to a reasonable conclusion. But for a person on the brink of financial disaster, it’s very uncomfortable to be told, “You know, I think there is a 70 percent chance that everything will turn out well.”
The risk is particularly acute for black and Latino workers, who have been disproportionately affected by the loss of jobs and are less likely to have savings or other assets to draw on. A recent working paper by researchers from the University of Chicago and the JPMorgan Chase Institute found that black and Latino households reduce spending much more than white households when their incomes drop.
“When 30 percent of its population has no wealth, this has real implications,” said William E. Spriggs, a Howard University professor and chief economist at the AFL-CIO. “There is no piggy bank. That’s all. So when you cut your profits, your drop in consumption will be huge.”
