Millions of jobless Americans cut spending following the expiration of their $600 enhanced unemployment benefit
Karen Engels, a mother of a sixth-grader and a third-grader, has been out of work since March, when she lost her job at a country club in Florida. The 44-year-old was among the 28.3 million unemployed Americans who relied on the $600 enhanced unemployment benefit to keep her family on-top of their bills before it expired the week ending July 25.
“We’ve stopped doing just about everything,” Engels, who is still receiving a $175 weekly state unemployment benefit, told Fortune. “We don’t go anywhere. The grocery bill was cut in half. Our kids need clothes, but we can’t buy clothes.” And her husband, who saw his pay cut, is looking to trade in his car for a cheaper used vehicle.
To find out how jobless Americans are faring without the $600-per-week federal pandemic unemployment assistance, Fortune and SurveyMonkey teamed up to poll 2,478 U.S. adults between August 17-18.*
Among Americans who were receiving the pandemic unemployment assistance when it expired in July, 31% say they have cut their household spending since the benefit receded in July—a response that indicates a decline in spending in millions of households. Meanwhile, 21% of unemployed Americans have since intensified their job search, and 20% sought out other sources of income. These figures are likely to rise as unemployed workers go more weeks without the enhanced benefit.
In all, nearly $70 billion was being pumped into households each month by the $600 weekly pandemic unemployment assistance, according to an analysis by Fortune. Considering that consumer spending amounts to two-thirds of U.S. GDP, this cutback in spending could slow down or even derail the economic recovery.
“Without extra unemployment insurance we could go back into recession,” Moody’s Analytics chief economist Mark Zandi told Fortune. Zandi believes the current levels of mass joblessness—an unemployment rate of 10.2% in July—warrant the government continuing to boost unemployment benefits.
The additional unemployment assistance would also help Americans who can’t return to work because of the pandemic, Zandi says. Homebound parents who rely for childcare on schools, which in many cases aren’t reopening in-person, are particularly affected (a dilemma that has had a particularly harsh impact on working mothers). That’s the case for Engels, who is keeping her job search sidelined because her kids’ school in Florida’s Palm Beach County isn’t returning to in-person classes.
“I can’t go to work if they’re home,” Engels said.
President Trump signed a memorandum earlier this month that grants $300 enhanced weekly unemployment benefits to people out of work if their state opts into the program. That $300 weekly enhanced unemployment benefit replaces the $600 enhanced benefit. As of Wednesday, nine states have been approved to send out $300 per week in federal funds on top of regular unemployment benefits.
The $44 billion allocated by Trump for the enhanced unemployment benefit is estimated to last through the week ending Aug. 29, according to a report by the nonpartisan Committee for a Responsible Federal Budget. And there still remains the possibility the memorandum will face a legal challenge.
*Methodology: The Fortune-SurveyMonkey poll was conducted among a national sample of 2,478 adults in the U.S. between August 17–18. This survey’s modeled error estimate is plus or minus 3 percentage points. The findings have been weighted for age, race, sex, education, and geography.
This is an excerpt from Fortune Analytics, an exclusive newsletter that Fortune Premium subscribers receive as a perk of their subscription. The newsletter shares in-depth research on the most discussed topics in the business world right now. Our findings come from special surveys we run and proprietary data we collect and analyze. Sign up to get the full briefing in your inbox.