This Hasn’t Happened Since Late 1999

Congress finally passed a stimulus. The stimulus checks are $600 per person. They are going out to those who make less than $75,000 per year and couples who make less than $150,000. Dependents will be getting $600 as well which is actually $100 more than the first stimulus. The checks shrink the more money people make. People who make $100,000 per year or more won’t get anything.

Mnuchin is promising these checks will go out as early as next week. Therefore, we could see a boost in spending in December after all. However, they won’t come in time to be used for Christmas gifts. Many people will use the checks for basic necessities anyway. For some people, their last thought is buying gifts. They are in survival mode. Cynics will say these stimulus checks will go into people’s Robinhood trading accounts. Some people are even forming strategies around story stocks, anticipating a pop when the checks go out. Buying a high flyer is not what people should do with their money, but it’s up to them.

Unemployment Benefits

These checks won’t save people, but unemployment benefits will help a lot. For gig workers, there will be a $100 boost in weekly unemployment checks which is better than the $0 given last time. For everyone else, the benefits are $300 per week for 11 weeks, but they might not start immediately. States’ unemployment computer systems are terrible. This spring Florida had people waiting outside on long lines to apply for benefits which could have spread the virus further. Many state governments are living in the 20th century.

The $300 in benefits in addition to the regular ones add up to about 85% of typical incomes (without the $300, it’s 50%). PUA and PEUC benefits will also be extended 11 weeks. The expiration of 14 million people on benefits would have decimated the economy. This negative consequence is partially why Congress actually passed a stimulus. Generally, Congress needs a major motivator to compromise. As a clarification, PUEC benefits can continue past March 14th (the 11 weeks) to April 5th if the individual hasn’t reached the max. That probably won’t be many people.

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