Mortgage payments may be a challenge as $600 unemployment bump nears expiration
What’s the best way to get Americans off unemployment amid coronavirus?
Raymond James policy analyst Ed Mills and American Institute for Economic Research President Edward Stringham discuss the high amount of money the federal government has spent to combat the economic impact of the coronavirus and the long-term impact of this spending.
Without additional income support, there is mounting concern that American households may not be able to keep up with their regular expenses – like mortgage payments – once expanded unemployment benefits expire at the end of the month.
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A new report from LendingTree shows that more than half of mortgage borrowers experienced income loss due to the coronavirus pandemic, while one in five people have missed a loan payment since March.
Forty percent of mortgage borrowers said either themselves or someone in their household has been receiving unemployment benefits.
CONSUMER SPENDING CUTOFF: AS UNEMPLOYMENT BENEFITS EXPIRE, US ECONOMY MAY SUFFER
The $600 unemployment bump has helped buoy many households’ financial situations throughout the pandemic. In fact, studies have shown benefits for 68 percent of workers would exceed earnings.
However, facing income loss, Americans said they would be most willing to default on their mortgage payments as a means to make ends meet than other debt payments, as reported by LendingTree
Meanwhile, millions of Americans continue to file new unemployment claims each week as the number of confirmed cases in the U.S. continues to tick higher, hitting states like Arizona, Florida and California particularly hard.
More than 51 million Americans have filed unemployment claims since mid-March.
“To avoid a significant decline in consumer spending once the $600 bonus expires, either the economy will have to create a lot of jobs very quickly or we need more fiscal support,” Torsten Slok, chief economist and managing director for Deutsche Bank Research, wrote in a research note.
HERE’S WHAT TRUMP’S BACK-TO-WORK BONUS COULD LOOK LIKE
Discussions on a “Phase 4” stimulus package took place on Capitol Hill on Monday between administration officials, including the president, and Republican leadership.
Republicans have expressed resistance to continuing the additional $600 benefit because they believe it discourages unemployed individuals from seeking out new work.
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However, the Trump administration has advocated for a “back-to-work” bonus, which would provide a monetary incentive for people to obtain new employment.
Another stimulus bill would need to be passed by both chambers of Congress and signed by the president before taking effect. Senate Majority Leader Mitch McConnell has said he hoped to have something approved before lawmakers leave for August recess.
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