As states begin to apply for and implement President Trump’s lost wages program—which will use federal money from a disaster relief fund to pay a weekly $300 unemployment supplement—new analysis from Goldman Sachs indicates that the new benefit is “too little too late” to have any meaningful impact on the economy in August.
Goldman’s researchers found that the lapse in the $600 weekly payments from the CARES Act, which expired at the end of July, will put a $70 billion dent in personal income during the month of August.
New data analyzed by the researchers suggests that the expiration of that weekly $600 check also led to an immediate pullback of spending at the end of July, especially for discretionary items like clothes.
The new $300 weekly benefit, which could cover some of the losses, is “unlikely to meaningfully support incomes” until the month of September, the researchers said, because it will take several weeks in most states to set up the program and begin sending checks.
Last week, research from Bank of America suggested that even though the new $300 supplement may offset economic damage in the short term, the loss of the $600 benefit will hurt growth in the long term without further stimulus legislation from Congress.
$25 billion. That’s about how much the federal government paid in unemployment benefits each week in June and July, according to government data analyzed by Goldman. When the $600 weekly payment expired, that number plummeted by $15 billion per week.
The Lost Wages Assistance program came into being earlier this month via an executive memorandum signed by President Trump after lawmakers were unable to agree on how—or whether—to extend the expired $600 weekly supplement provided by the CARES Act. The program will redirect $44 billion from a federal disaster relief fund to a grant program administered by the Federal Emergency Management Agency (FEMA). States must apply for the grants, and once they are approved they’ll receive three weeks of unemployment funding to be paid out in $300 weekly checks that will be retroactive to August 1. States also have the option to contribute $100 on top of the federal benefit and pay a $400 weekly supplement. More than 25 states have been approved. So far, only Arizona has begun paying out any benefits under the program.
$300 Unemployment Checks Approved In California For 3 Weeks (Forbes)
President Trump’s $300 Unemployment Benefit: A State-By-State Update (Forbes)