Tens of millions of people struggled to buy food and pay rent in July, even before the expiration of key sources of federal pandemic relief.
The share of households without enough food to eat increased from 10.1% to 12.1% between mid-June and mid-July, while the same figure for those behind on rent jumped from 17.5% to 21.4%, according to an analysis of Census data by the Center on Budget and Policy Priorities, a left-of-center think tank.
“Safe to say, we have every reason to fear that without more federal government aid soon, people will face even more difficulty getting food, clothing, and shelter than they did in July,” said Arloc Sherman, the group’s vice president of research.
“Many households’ key financial resources have vanished now, and that’s really frightening,” Sherman added.
Without another coronavirus relief package from Congress, many more people will fall into desperate circumstances, economists fear. Negotiations regarding the next relief package are in a stalemate due to disagreements between the two parties over unemployment benefits and aid to states.
People were likely already anticipating losing their unemployment benefits in July, which led them to cut back on their food and rent expenditure, as shown in the most recent Census “Household Pulse Survey,” Sherman said. Until Congress passes another relief package, these benefits will remain expired. President Trump did sign an executive order on Aug. 8, providing jobless workers a $400 weekly stipend above their regular benefits, but most states are yet to take advantage of the offer.
The $600-a-week extended unemployment benefits from the federal government played a particularly key role in keeping families out of poverty, according to research from Columbia University.
“The biggest change in the past month is $600-a-week unemployment benefits,” said Rachel Greszler, a senior policy analyst at the conservative Heritage Foundation. “If that loss is not replaced by anything else, that will definitely have an impact on evictions and hunger and people’s health.”
It’s likely that without the extended unemployment benefits, those without jobs have been forced to spend less.
“Early indicators show that since the enhanced unemployment aid expired, those who received it are starting to spend less money. Some of that is probably on food and housing,” said Jared Bernstein, a top economic adviser to former Vice President Joe Biden.
“That’s coming right out of the data, it’s common sense, we shouldn’t ignore that,” said Bernstein.
After many months of the federal government propping up the economy with the $2.3 trillion CARES Act and other relief efforts, the nation is now starting to see the full ramifications of the pandemic-induced economic collapse.
“Unfortunately, it’s not surprising that we have millions who are hanging by a thread financially,” said Brian Riedl, an economist at the conservative Manhattan Institute. “Now, it’s finally starting to look more like a normal recession in terms of poverty and hunger.”
“The government fired the biggest ever anti-recession bazooka in history in the spring, which kept unemployment down and spending up,” said Riedl. “That was very unique. Unless we see that again, things will be tough.”
At the same time, it should be noted that many people are doing well financially, with savings on the rise for at least half the country.
However, some economists say that the rise in savings is not necessarily a positive sign.
“The savings rate going up probably shows that people aren’t as confident about the future, and consumer spending has declined too,” said Jed Kolko, chief economist at Indeed, a jobs website. Kolko added that job postings in high-wage industries such as tech and finance have slowed significantly in the past few weeks, which he said was another “red flag” for the economy.
Trump’s economic adviser Larry Kudlow has pushed back on the pessimistic outlook held by many economists. Instead, he has repeatedly said that the U.S. economy is going through a “V-shaped” recovery. Kudlow said last week that he expects an annualized growth rate between 20% and 30% in the third and fourth quarters of 2020. This high growth rate would mostly reflect, however, a partial bounceback from the catastrophic dive the economy took in the second quarter because of the pandemic.
“There’s a huge housing boom. There’s a retailing boom. That’s an automobile boom. Trucking is still very strong,” Kudlow said in late July.
