It is time for additional disaster relief.
The key proposals will likely include:
1. Extension of Federal Pandemic Unemployment Compensation (FPUC). The current amount is $600 per week for those receiving unemployment benefits, in addition to the state benefits. This expires at the end of July. This might be reduced to $400 per week (or a percentage of state benefits). This will probably be extended through the election in November (Ideally the extension period would not be calendar based, but determined by the state unemployment rate). This is critical, or we will see a significant slump in spending in August, and a sharp increase in delinquencies (rents, mortgages, credit cards, etc).
2. State government relief: It is time for a substantial state relief package. Without relief, the states and local governments will have to start laying off a significant number of employees (Don’t be fooled by state and local government hiring in the June employment report – that will be due to a seasonal adjustment quirk). State governments will have no choice – they have to run a balanced budget.
3. Recent Graduate Program: There are few job opportunities for people graduating from high school or college this year. These people should be immediately eligible for unemployment benefits (or maybe hired as contact tracers!).
4. Expand the Paycheck Protection Program (PPP): This program has kept many small businesses alive, and millions of employees employed. There will have to be additional disaster relief for these companies, or millions of people will be let go soon.
Even with all this disaster relief, there will be significant structural damage to the economy even with an effective treatment and/or vaccine at the end of the year or in early 2021. We need to start thinking about how to put people back to work in 2021 so we don’t have an extended period with excessive unemployment.