Economy Skirted A Depression, But Risk Is Still Here

Worst PCE Report Ever By A Mile

April PCE report was the worst PCE report ever. It gives us the details on how bad the economy would have been if the government didn’t give out extra unemployment benefits. It also shows how horrible it likely was for people who didn’t get benefits or got them a few weeks late. Finally, it tells us how bad the economy will be if the federal unemployment benefits are taken away by the end of July.

This economy would be far worse than the Great Depression if it wasn’t for government help. Even if there were no shutdowns, many people would have stayed inside which means the problem wouldn’t have been avoided. It's not being dramatic to say the economy was saved. 

If the extra benefits don’t get paid starting in August, it won’t be nearly as bad as it would have been if they never existed because it looks like people are starting to get their jobs back. It still will be terrible though. There’s also the possibility the virus spreads because of the riots and there’s a chance of a 2nd wave. America went from socially distancing to the exact opposite with all these protests. It’s an unfortunate test to see the effectiveness of the distancing.

As you can see from the chart above, median unemployed workers in many industries are getting paid more by not working than they would by working. 68% of people unemployed are making more money. People who are making less money likely had more wealth to fall back on since they were paid more. When the data point is above 100, it means they are getting paid more now.

As you can see, the workers in the lowest-paid industries are getting the largest percentage of their normal income. Usually, in recessions, the lowest-paid workers are hurt the most, but those who are getting help from the government are in the unusual spot in which they are doing better. Information technology workers are being helped the least; the good news is they have been the least affected by this recession.

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