When Will Solvency Become an Issue?
US households have weathered the COVID crisis relatively well up to this point but there are two deadlines coming up for US consumers that could prove to stall out the economic recovery. On July 31st the extra $600 unemployment benefit per week as part of the CARES act will run out. Unemployment benefits normally last 26 weeks meaning workers who lost their job in March as part of the initial government shutdowns will exhaust all of their unemployment insurance benefits in September. Initial Jobless claims have fallen sharply from their peak but returning citizens to work may take longer than most are currently expecting. If more fiscal support is not extended to households by keeping the expanded unemployment benefits or implementing a fresh round of stimulus the risks will begin to rise that the US will experience a widespread solvency crisis in the household sector.
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