US Unemployment WoesHowever, as the parties negotiate, the end of the $600 per week unemployment benefits could cause some hardship. Already, families are finding it difficult to make ends meet with the loss of wages. Republicans have suggested a lower, weekly addition of $200 in order to incentivize workers to return to the workforce. Democrats are seeking a continuation of the $600 weekly payments. A $400 settlement is likely in the cards. As the negotiations continue, unemployed workers continue facing struggles for survival. However, the broader issue facing the U.S. economy is consumer spending moving into the third quarter. Should economic relief end completely, there could be a substantial decline in consumer spending. While the stock market has moved back toward pre-COVID levels, a substantial drop in spending would likely result in another move down. Recent numbers indicating that the US GDP declined by an annualized 32.9% appear to be a harbinger of pain to come.
Addiction to StimulusThe notion that the U.S. economy is completely dependent on stimulus packages plays into Treasury Secretary Steven Mnuchin’s narrative. The Secretary expressed concern that the economy was ‘addicted’ to stimulus. The recent rise in the price of Bitcoin appears to be related to the desire for investors to find safe havens for wealth. The fear of inflation after the dust settles remains genuine.
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