Yes, That Extra $600 Really Is Making Up for Lost U.S. Income
Yes, That Extra $600 Really Is Making Up for Lost U.S. Income
(Bloomberg) -- Expanded unemployment-insurance benefits have given concrete support to U.S. personal incomes during the pandemic, according to new figures published Friday that will fuel the debate over whether to extend them when they expire next month.
Compensation of employees, a measure which includes wage and salary disbursements as well as employer benefits, fell 8.3% in the three months through May, according to monthly Commerce Department figures on personal income and spending. But compensation of employees, plus government unemployment-insurance benefits, rose 2.3% over the same period, thanks to a surge in payouts last month.
The data indicate the expansion of unemployment insurance in the relief measures passed by Congress in March, which augmented weekly payments by $600, has been successful in stabilizing household incomes on average. Lawmakers are currently debating whether to extend the duration of the expanded Federal Pandemic Unemployment Compensation payments, which are set to expire at the end of July.
The data showed receipts of unemployment insurance benefits rose an annualized $825.3 billion from the prior month, with Pandemic Unemployment Compensation payments making up $691.9 billion of the increase. Pandemic Unemployment Assistance, or the expansion of unemployment benefits to those not typically eligible like the self-employed, accounted for $101.5 billion.
“Government stimulus measures are providing a big boost to income,” said Brett Ryan, senior U.S. economist at Deutsche Bank AG. If that boost is removed when the supplemental benefits expire, “it will have an impact on consumer spending in the back half of the year,” he said.
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