If you’re one of the millions of people collecting unemployment benefits currently, some important changes may soon come your way.
At the end of July, 2020, the $600 weekly supplemental unemployment benefit included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, could end.
What the CARES Act covered
Congress passed the $2 trillion CARES Act in March, 2020 as a way to provide economic relief to Americans affected by the Covid-19 pandemic. The bill included approximately $300 billion in direct stimulus payments (about $1,200 for most people) and added the weekly $600 stipend to existing unemployment benefits.
However, the extra $600 from the federal government is currently set to end on July 31, 2020. But millions of Americans are still unemployed. Approximately 18 million people are unemployed. More than 1 million have reportedly filed for unemployment per week since March, 2020. Although the unemployment rate declined by 2.2 percentage points to 11.1% in June, 2020, the rate is still 7.6 percentage points higher than it was in February, according to the Bureau of Labor Statistics.
What the future of the U.S. economy may look like
Meanwhile, Covid-19 cases are on the rise in the U.S. The U.S. recorded more than 75,600 daily cases on July 16, 2020, a record number of daily cases. This day marked the 11th time the U.S. broke its daily case record in one month.
As a result, some states have reinstated business closures. After initially reopening, California shut down indoor dining, bars, and more. Bars also closed in Florida and Texas, where Covid-19 cases are on the rise. The increase in case numbers and closure of businesses could mean that the improvement in the unemployment rate might be temporary.
In fact, the Federal Reserve (Fed), the central bank of the U.S., said that it expects unemployment to remain high through the rest of the year, and beyond. The Fed predicted that 2020 will end with unemployment at 9.3%. Economic output is also expected to decrease by 6.5% at the end of 2020, compared to 2019.
What Congress could do
Congress is currently in session and Covid-19 relief is taking center stage. The Democratic-led House of Representatives passed another $3 trillion relief package in May, 2020, which was rejected by the Republican-led Senate, which wants a smaller bill.
Democrats in the Senate reportedly hope to extend the $600 weekly unemployment benefit, while Republicans are more eager to create incentives for people to get back to work. The next round of relief could also include another stimulus check, an idea supported by President Trump. Since some of the unemployment benefits expire at the end of July and congress goes on recess in August, Congress is expected to hammer out another stimulus package (if there’s another one), in the final weeks of July.
In the meantime, if you’re struggling financially as a result of the Covid-19 pandemic, consider continuing to pad your emergency fund and rainy day savings if you’re able. If you can set aside some of the money you might have received as part of unemployment or your stimulus check, think about trying to do so. And if you haven’t received a stimulus check yet and you think you should have, you can use the IRS’ tool to check the status of the payment.
Make sure to file for unemployment if you’ve lost your job as a result of the pandemic. You can still take advantage from some of the extended benefits from the CARES Act. Be sure to keep up with our resource center to help you manage your money during the pandemic.