The failure to extend the $600 weekly unemployment bonus payment that expired last month would lead to a 44% decline in local spending if it is not renewed, according to a study circulated Monday by the National Bureau of Economic Research.
The paper, which has not yet undergone peer review, also found that reducing the payment to $400 would lower spending by 12%, while cutting it to $200 would shrink spending by 28%.
“We find that higher replacement rates lead to significantly more consumer spending,” concludes the study, written by economists affiliated with six different universities.
The report’s findings come as Republicans and Democrats debate extending the benefit.
President Trump signed an executive order on Saturday meant to provide a $400 bonus payment to unemployed workers. However, that would be $200 less than what the previous benefits provided before expiring in July.
House Democrats passed legislation that would extend the $600 payment until Jan. 31, 2021, for most jobless workers.
Meanwhile, Senate Republicans included a $200 additional unemployment payment in the HEALS Act that Majority Leader Mitch McConnell, a Republican from Kentucky, released in July.
Talks on extending this payment, as well as a host of other issues, stalled last week as congressional leaders and the White House could not agree on several provisions. Their lack of progress comes as the coronavirus upended millions of jobs since its outbreak in April, leaving many workers to rely on unemployment.
