Read for 5 minutes
This story originally appeared on The Epoch Times
Millions of Americans are set to lose their federal pandemic unemployment benefits as a Sept. 6 deadline approaches for an end to the emergency programs, with dim prospects for any extensions in light of surging demand for workers and reports that states are not moving to extend them.
Around 7.5 million Americans are set to fall off a “benefits cliff” as the September cutoff looms for the federal pandemic unemployment programs, which include the $300 weekly supplement to state benefits, according to an estimate by The Century Foundation, a left-leaning think tank.
Even as the economic recovery continues and the labor market has shown signs of strength, including job openings at a record high, there are concerns about the impact of the Delta variant of the CCP (Chinese Communist Party) virus on some local economies.
In an August 19 letter, Janet Yellen, Treasury Secretary and Martin Walsh, Labor Secretary told Congress leaders that the federal Pandemic Funds allocated to states under the American Rescue Plan Act can be tapped by any state in order for them to provide unemployment assistance.
Walsh and Yellen wrote that there are states in which it might make sense to provide additional support for longer periods of time for those who are unemployed. This would give them more time to look for work in places where the unemployment is high.
They added that the Delta variant could also present short-term problems to local economies as well as labor markets.
CNBC Make It received replies from 20 states stating that they were not planning to provide extensions or extend benefits. The states that confirmed that they do not have plans to provide benefits extensions are Alabama, Alaska and Arkansas.
With the passing of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), March 2020, lawmakers created three programs: Pandemic Unemployment assistance (PUA), which covers workers who are not eligible for state unemployment benefits, and Pandemic Emergency Unemployment Compensation(PEUC), which provides additional coverage over the 26 week period most states offer. Federal Pandemic Unemployment Compensation is a $300 weekly increase on state benefits.
The federal unemployment compensation programs will expire on Monday, but they won’t be affected by the state programs. Nearly 9 million Americans were receiving benefits under two of the programs as of Aug. 7, according to a Labor Department report (pdf)–5 million through PUA and 3.8 million via PEUC.
This comes at a time when economists have reduced their growth forecasts for the current quarter. However, analysts believe that if COVID-19 patients fall during the last months of 2021 the country will see its highest growth rate in many decades.
The foundation for the economic recovery appears relatively solid, with a recent Commerce Department report showing wages rising and a boost in savings, giving American consumers more spending potential to unlock going forward, even as the rise in infections clouds the outlook.
The Commerce Department data also showed that consumer spending increased by only 0.3 percent in July, which is a slower rate than the previous month’s 1.1 percent growth. This indicates that the economy may be slowing down in the third quarter.
The U.S. economy is driven by consumer spending, which accounts for approximately two-thirds.
A sharp decline in consumer sentiment is another cloud that could be looming over the recovery. In August, Michigan’s consumer sentiment index dropped to 70.3 from 2011, the lowest point since 2011.
Richard Curtin (the survey director) stated that the extreme reaction of consumers was due to the surge in Delta variant inflation and slower wage growth. He also noted that the declines in unemployment were smaller. The extraordinary drop in sentiment is also indicative of an emotional reaction, from the fading hope that the pandemic would end soon and life could be normalized.
The Conference Board published a separate sentiment gauge. It showed that consumer confidence in the United States fell to the lowest point in six months in August. This was due to concerns over the spreading of the Delta variant, and the rising prices.
The Conference Board said in an Aug. 31 report that its consumer confidence index fell from a reading of 125.1 in July to 113.8 in August.
Lynn Franco, Senior Director of Economic Indicators at The Conference Board stated in a statement that “Consumer confidence fell in August to its lowest point since February 2021 (95.2).” Concerns over the Delta variant, and, in lesser measure, higher gas prices and food prices, have led to a less positive view of current economic conditions, and thus, short-term prospects for growth.
The two other Conference Board gauges, one that assesses current economic conditions, and another which reflects consumers’ future outlook in the short-term also fell.
Tom Ozimek is a journalist, marketer, communications and marketing expert with a background in adult education, journalism and deposit insurance. Roy Peter Clark has the most valuable writing advice. He says, “Hit your target” and “leave it for last.”
Publiated at 19:52.33 +0000, Wed, 01 Sep 2021