Normally, unemployment benefits will only pay for about enough to pay for basic necessities and maybe enough to pay for gas to go to job interviews. The enhanced unemployment benefits have
resulted in over 2/3 of people who lost their jobs making more on unemployment than they were making, softening the blow of losing their jobs. Last month, the economy added ~2.5 million jobs, when the expectation was nearly 8.5 million jobs lost, a swing of nearly 11 million jobs. Those that have a government-insured mortgage are able to receive 12 months of forbearance. I think most of the economic pain is going to be kicked past the election; I think this was probably by design.
The unemployment numbers are way too low. Tax withholding data shows a year-over-year reduction of 30% in April and 33% in May. This means that nation-wide total payrolls (including PPP-supported payrolls but not including unemployment payments) are down by roughly those measures. However, the BLS employment rate is down year-over-year only 14.9% in April and 12.5% in May. This makes me think that a whole hell of a lot of people -- much more than even the BLS acknowledges as being possible miscategorizations -- are being counted as employed in the unemployment number, but actually have substantially reduced hours or are somehow otherwise not counted as unemployed.
The CBO has
reported that amounts withheld from paychecks in May fell by 15%, and said this is because of declining wages and certain provisions in the CARES act, such as businesses being able to
defer payment of certain taxes.
The labor participation rate
fell about 3% from February to April, and rebounded a bit in May. The average number of hours worked is largely
unchanged. I don't think the unemployment rate factors the 'gig economy' type workers such as Uber drivers, and hair stylists (who are apparently often independent contractors), who are likely doing especially bad for the most part.
I believe the sharp reversal in the change in the number of jobs from April to May, in addition to the pent up demand from the stimulus payments and the 2/3 of unemployed making more on unemployment means that once states reopen, jobs should quickly come back. We may not get back to employment levels of early this year for quite some time, but 3-4% unemployment is I believe above full employment and not sustainable.
PPP is running out about now. The enhanced unemployment benefits end July 31. The $1200 payment is probably roughly spent now by the low-income people who relied upon it. If Trump wants to temporarily wallpaper over this problem until November, he needs to get congress to pump more stimulus into the economy soon, and probably even more than last time will be required. Otherwise I think that this is going to turn into a widespread economic disaster in the next couple of months. Some people think that the action by congress and the Fed bridged the pre-lockdown and post-lockdown economies, and the recovery will therefore be relatively complete, but I really doubt it: the economic damage done by the shutdowns was catastrophic, a lot of business will not be able to resume properly, and a lot of these jobs will not be coming back anytime soon. Any past or future stimulus will IMO only be opiates which temporarily delay the symptoms without actually reducing the total damage, and in fact they'll probably make the total damage worse.
There is about $130 billion in PPP funding remaining out of about $660 billion in total funding. I don't see this running out anytime soon.
The $1200 payment I believe likely was put in the bank for the most part. The
personal savings rate was 33% in April, which was probably a combination of the $1200 stimulus, added income from enhanced unemployment benefits, and people being unable to spend money in most social settings due to government-mandated closures. I believe once people are getting back to work, they should be willing to spend some of this money they have in savings, which should fuel demand for additional workers.
The problem with enhanced unemployment benefits is it gives workers a disincentive to work, and an incentive to get laid off. It is also likely funding some of the civil unrest that is causing a lot of long term harm to the poorest of communities. I believe not extending the enhanced unemployment will get the protests and more importantly, the riots to stop, which should be more important to Trump's election prospects. Not extending the enhanced unemployment also gives Democrat governors and local officials political cover for keeping their economies closed longer than is necessary (while allowing political convenient protests).
Whoever Biden chooses to be VP will effectively be the president on Feb 1 2021 if Biden is elected. They will probably have the title of President by the end of 2024. I would reserve judgment until Biden announces his VP pick, however since effectively winning the nomination, Biden has been pulled further to the left by Bernie Bros, so who knows what kind of presidency a Biden administration would be.
I've thought from the start that it'll be Kamala Harris, and I still think so. This'll make the ticket even worse, since she's an authoritarian neoliberal who only cares about power.
I would have thought that Harris' attack on Biden's stance on busing in one of the debates would prevent her from getting the VP pick. Harris' policies on crime have also negatively affected africian-Americans disproportionately, which wouldn't do any favors to the ticket. I would consider most elected Democrats as authoritarian tyrants, especially after the coronavirus lockdowns, and even more so after the riots.
I would say that either Val Dennings or Atlanta mayor Keisha Lance Bottoms are most likely to be Biden's VP pick. Either of these would help Biden play the identity politics card, and would help him ignore that it was democrat governors and mayors who allowed the riots to do so much damage to poor neighborhoods.
If Biden is pandering to far leftists, I have no reason to discount that his administration would not be a far-leftist administration. Keep in mind that Biden lacks the mental capacity to make actual decisions, so whoever is his VP will likely be the one to actually making decisions the president would normally make.
If Biden is pandering to the crazy leftists, he will likely turn off moderate voters in the 2020 election. The response to the coronavirus and the civil unrest has shown Democratic leaders' tyrannical tendencies, which I believe will hurt Democrats down ballot.
It's possible that he, or his VP rather, go completely deranged and start implementing unpopular policy but I think establishment democrats won't let that happen. Nancy Pelosi's done a decent job not letting the progressive newly elected members (AOC, Rashida Tlaib, ect.) from shifting the party even further left through any significant legislation that's made any sort of difference. I'd assume Biden's administration would be the same way because far left legislation WILL get out independents to vote Republican down the line in 2022.
Following Obama's election in 08, Republicans won in an absolute landslide in Congress during midterms, maybe because of Obamacare.
Pelosi is not in charge of presidential politics, she is only in charge of Congress. If Democrats win both the presidency and the Senate, I would expect the Supreme Court to get packed, and for fair elections to be removed.
