An unprecedented record 3.3M Americans file for unemployment in one week.
Last week, almost 3.3M Americans filed for unemployment benefits. We knew that as states went on lockdown, only essential and professional workers were allowed to work, while non-essential workers were being laid off and deprived of income.
3.3M is by far the largest weekly unemployment on record — it’s nearly 5X larger than the previous record of 695K, back in 1982.
It’s a massive jump from the 282K unemployment claims filed two weeks ago. US employers have added jobs to the economy for a record 113 months straight — a streak certain to end this month.
It’s getting very real. This is the first news we have about the economic pain precipitated by COVID-19 (though the economy has felt it for weeks now). But we also have some positive news, which is the $2T economic stimulus bill, expected to become law next week. It includes incentives for businesses not to lay off workers and extra funds for those who need to file for unemployment benefits.
Let’s get fiscal. The White House and Senate finalized a deal for a huge $2T economic stimulus package — it’s 2.5X bigger than the stimulus given after the 2008 financial crisis. 90% of Americans will be eligible to receive full or partial payments, according to estimates. Since it’s being paid to you (courtesy of your tax dollars), we’ll itemize the receipt:
Around $900B in payments to Americans: $1.2K checks sent to each taxpayer with individual incomes of up to $75K/year (little less for $75K-$99K) and no check if you’re making over $100K. Families also get $500/child. Plus, the gov is looking to dramatically increase unemployment assistance by an extra $600/week for up to 4 months.
I’m just a bill, yes I’m only a… mammoth $2T economic rescue bill. We didn’t forget there’s still a key $1.1T left to account for:
$350B for Small Biz: Loans for small businesses. Important: Loans are forgiven for businesses that don’t lay off workers and keep sending them paychecks for the duration of the crisis.
$500B for Big Biz: $425B in loans for struggling corporations and $75B for specific industries like airlines (which will be banned from stock buybacks — the $$$ should go to employees and investments, not shareholders).
$150B to State/Local Gov: To deal with virus-related costs and losses.
$100B for Healthcare: To help hospitals manage the front lines of the crisis (and buy crucial medical supplies like beds, masks, and ventilators).
Factors that Affect the Amount of Your Stimulus Check:
Here’s what the government will take into consideration before cutting your stimulus check.
College Students: There’s unfortunate news for many college students: if anyone claims them as a dependent on a tax return, they won’t be eligible to receive the check for themselves. (This applies to most students aged 24 or under.)
However, if you’re in college and paying for more than half of your own expenses — or you’re over the age of 24 — you may still be eligible to receive the check.
Retired or Persons with Disabilities: Individuals who don’t receive an income because they’re retired or living with a disability will still be eligible to receive the stimulus check.
If you don’t normally file a tax return, you may need to submit a simpler version of a tax return — which will not result in your owing taxes — in order for the government to issue the stimulus check.
Americans Living Abroad: If you’re living abroad, you’re still eligible to receive the check so long as you meet the eligibility requirements and have a Social Security number.
How Will You Receive The Relief Check?
Now that we know how much to expect from the government relief check, we still have another important question to answer: How will the money actually show up?
If you already have direct deposit information on file with the IRS to accommodate your tax return, the money should automatically show up in your account if you’re eligible. If you don’t, you will receive a paper check from the government… eventually.
While direct deposits will begin going out over the first three weeks of April , paper checks will not be issued until May 4, and will go out at a rate of 5 million per week.
The checks will be issued to those with the lowest AGIs first, so if you’re a middle-class earner, it may take a while for you to see the stimulus check if you’re receiving it in this way.
Although there’s not currently an easy way to provide the IRS with your banking information, the government has announced it’s planning to roll out an online portal to do so “in the coming weeks.”
However you receive the money, though, it’s probably more important than ever to incorporate the small windfall into a sound overall financial plan — one that accounts for the rest of the impact the coronavirus crisis may be having on your money.
Many workers have been laid off either temporarily or permanently, and the stock market has experienced some serious turbulence.
That said, this trying time could be the harbinger of prosperity ahead: bear markets lead to losses, but can also allow investors to get in at a low price.
And shifts in personal financial flow can be a great opportunity to take a closer look at your long-term goals and budget.
THE TAKEAWAY
This (partly) fills the giant spending hole… Consumer spending + government spending makes up a huge part of America’s Gross Domestic Product. $2T is around 10% of the total spending/production in the US each year (aka, 10% of GDP). In 2019, the US gov spent $4.45T — this stimulus alone is nearly half that, and is meant to offset spending and income that doesn’t happen because of the virus. And it still might not be enough.
An unemployment safety net is crucial. Not getting laid off in the first place is better. Still, unemployment benefits might prove more important than one-time checks or loan incentives to businesses, since the government can’t force small biz to pay workers who aren’t working. Some could decline the government’s loan-that-become-grants offer and choose to save right now by laying off workers — many already have, as evidenced by the unemployment numbers.
Do you have a personal experience with the coronavirus you’d like to share? Or a tip on how your town or community is handling the pandemic? Please email me at Tips.RBNews@gmail.com and tell us your story.
