Stimulus Money Should Have Gone to the Jobless, Economists Say

Photo of author

By admin

But in terms of the multiplier effect, it’s likely to pale in comparison to the impact in the spring, when the unemployment rate was much higher and there were real fears the country could experience a second Great Depression.

“The more you hit the stimulus button, the less impact you see,” said Scott Anderson, chief economist at Bank of the West in San Francisco. And the hardest hit sectors — dining, entertainment and travel — are unlikely to see much of a boost now, since consumers are wary of going out or live in states like California and New York where restaurant dining and other activities are restricted.

Mr. Anderson said the stimulus could heighten some of the inequality that has become evident during the past year. Many white-collar employees are working from home and have largely been spared layoffs — the unemployment rate for college graduates is now just 4.2 percent.

But lower-paid service workers have been hit hard and the jobless rate stands at 7.7 percent for people with just a high school diploma. Better-off households, Mr. Anderson said, might spend the money on stocks or put it toward a home purchase, which could “aggravate a bubble forming in some assets like equities and housing.”

Julia Bald, a librarian who lives in Beverly, Mass., isn’t looking to bet on the stock market but she plans to put her stimulus check in the bank as a precaution. If the virus surges again and the library has to close down, she fears that she could be laid off. Ms. Bald also has $10,000 in outstanding student loans, and is trying to save as much money as she can.

“I haven’t had much financial difficulty, it’s not like I have to worry about back rent or anything,” said Ms. Bald, 30. “But my nervousness about where the economy could go from here makes me want to save it just in case.”

Dennis Helmstetter of Frederick, Md., also plans to save the $600 payment. He has managed to keep not one, but three jobs during the pandemic — as a real estate agent, a clerk at Fort Detrick and as a supervisor of the bar and restaurant at his local Elks Lodge.

Source link

Leave a Comment