In the first week of July, nearly 1.5 million Americans were receiving unemployment benefits from the little-known Emergency Compensation and Short-Term Emergency Compensation programs.
The state of play: For the week ending April 11, the first week for which program data is available, the PEUC and STC programs counted just over 62,000 and 27,000 claimants each, respectively. That means both programs have seen increases of about 15 times in about three months.
- Because it is important: As first-time claims for traditional unemployment benefits have been stable at between 1.5 million and 1.5 million a week for 18 consecutive weeks, pandemic-specific unemployment insurance programs are on the rise, showing further loss of jobs and weakness in the economy.
Meaning: The PEUC program provides additional benefits for those affected by the pandemic who have exhausted traditional state unemployment benefits.
- STC provides benefits to people who still have a job but whose employers have reduced their hours significantly to avoid layoffs, providing a proportional share of weekly benefits based on reduced work hours.
Between lines: The continued increase in PEUC claims probably means Americans remain unemployed longer, and the steady increase in STC claims shows that even companies that have not laid off their employees have still been reducing their hours and causing the government pick up the slack.
- The number of people receiving benefits in each newly created program is greater than the total number of people receiving unemployment benefits during any week in 2019.
The panorama: Such programs have helped keep spending for American consumers, but have been quite costly: Government spending in June totaled $ 1.1 trillion, according to CBO estimates, more than triple the outlays in June 2019, or an increase in approximately $ 763 billion.
Whats Next: The unemployment outlook appears to be worsening as the $ 600 in additional federal unemployment assistance expires.
- According to the Census Bureau’s Weekly Household Pulse Survey released on Wednesday, the number of employed Americans decreased by approximately 6.7 million from mid-June to mid-July, including a 4.1 million drop from the first to the second week of July.
- Yelp reported that its business closure account that had been steadily declining since March has stagnated with temporary business closings that are now becoming permanent.
- Yelp noted that permanent closings now represent 55% of all businesses closed since March 1, a 14% increase from June.
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