Economists believe that Congress should continue to pay unemployed workers $600 a week, or more

The reopening of Congress presents a daunting task-figuring out how to act on the economy. Peak of COVID-19 infection All over the country The states withdrew their reopening.A central point of tension is that as part of the CARES Act, the supplementary unemployment insurance payment of $600 per week issued in March is Will expire soon On July 31.

The Democratic Party has Proposal to extend payment Until the unemployment rate in each state drops below a certain threshold.At the same time, Republicans are Worry about continuing to pay in full, Saying they will prevent people from returning to work.This is real research shows Compared with previous jobs, many workers have made more money on increased benefits.

But when Latest installment our Periodic survey of quantitative macroeconomists,versus Global Market Initiative At the University of Chicago Booth School of Business, 33 economists in our study agreed that there is a 59% chance of keeping payments stable. increase If the weekly income exceeds $600, it is most beneficial to the economy. They say that reducing weekly wages to less than $600 is most likely to benefit the economy by 33%, while it is most advantageous to have only a 7% chance that the plan will fail completely.Considering another recent survey by IGM found that it makes sense for most economists to attribute the high unemployment rate to this Companies that don’t hire -People who choose not to work because they are not unemployed.

Jonathan Wright, a professor of economics at Johns Hopkins University, has been negotiating with FiveThirtyEight to design the survey. He pointed out that extending unemployment insurance is important because many workers are still unemployed.No matter what the federal government does, the state can continue to provide benefits, but those Don’t last foreverOr-some states are more tolerant than others.

How should Congress deal with unemployment insurance?

According to economists, every federal policy option is likely to benefit the entire economy to the greatest extent for the remainder of 2020

Options possibility
Maintain a weekly payment of $600 37%
Reduce weekly payments to under $600 33
Increase weekly payment above $600 twenty two
Allow federal pandemic unemployment insurance to lapse completely 7

A survey of 33 economists was conducted from July 17th to 20th.

Source: 55/IGM COVID-19 Economic Survey

Of course, the views on Congress’ response are nuanced, and many economists believe that, assuming there are no logistical obstacles, ideally, as the economy improves, gains should be phased out. When we delve into some of the ways that federal policymakers can help the unemployed, experts believe that the best strategy is now to continue to pay the unemployed $600 a week, but the possibility of linking federal unemployment benefits to major economic indicators As the economy improved, they became more and more generous. They say that if workers earn less than $600 a week for a fixed period of time, there is a 26% chance of benefiting from the economy, and a 22% chance that they will even continue to pay $600 to unemployed workers every week. This would be a better choice. If it means that some people will make more money than at work.

Deborah Lucas, an economist at the Massachusetts Institute of Technology, said that she would choose to temporarily keep her weekly salary at $600, or even increase it a bit, although she said that if the economy improves enough, The payment should decrease. She said: “In fact, there are a lot of people who do this kind of thing at work that seems to be a better thing,” she added, this is only for low-income people, otherwise they may feel pressured and unable to engage in harm their health . “In fact, it enhances the protection of social insurance and is a step towards a basic income for all people. I think even if there is no pandemic, these two policies will improve social welfare.”

[Related: Where The Latest COVID-19 Models Think We’re Headed — And Why They Disagree]

However, not all economists like to expand or maintain a weekly payment of $600. Annette Vissing-Jørgensen, an economist at the University of California, Berkeley, said that fundamentally speaking, some basic workers earn less than those unemployed non-essential workers. She added that although her overall concern is to make workers leave their jobs more financially attractive, especially if recruitment starts to increase again, in less developed states, “may continue to play a certain degree. Additional benefits”. Generous. Others pointed out that while the extra payment makes sense as a short-term stimulus, economists may treat the long-term consequences of such generous supplementary measures in a different way.

However, it’s worth noting that the least popular answer to the above question is a payment method of $600 per week That was proposed by some Republicans, They proposed a “return to work bonus” for people returning to work, rather than continuing to supplement workers’ unemployment benefits. Economists believe that the greatest chance of benefiting the economy is only 16%.

Allan Timmermann, professor of finance and economics at the University of California, San Diego, said: “Continued unemployment support has the dual benefits of reducing the poverty of unemployed workers and maintaining consumer demand in the economy.” Timmermann I have been negotiating with us during the investigation. “[It] It is regarded as an efficient tool to prevent economic stagnation. “

Similarly, we asked economists how they would allocate $1 trillion in the hypothetical COVID-19 stimulus package if they want to maximize the impact on the entire economy (assuming that the health crisis itself will be resolved through a separate bill). Economists ranked their three priorities first and gave unemployment insurance the highest percentage of first responders. However, although for most experts, this benefit is the top three priority issues, accounting for 67%, it does not account for the highest proportion in the overall response of the top three.Through this measure, economists believe that the clear priority is to provide funding to state and local governments, which is consistent with what they previously thought of the survey One of the most likely causes of economic disaster Will not be willing to bail out these governments. In this week’s survey, 85% of the respondents believed that this should be the top three priorities for legislators, while 36% of the respondents believed that this should be the first.

What should be the priorities of the federal stimulus plan?

According to the ranking of economists, the priority of the federal stimulus package envisaged to obtain the greatest overall economic benefit

Percentage of economists who make it a priority…
category number 1 number 2 number 3 In the top three
State and local government 36% twenty one% 27% 85%
Unemployed workers (through unemployment insurance) 39 15 12 67
small companies 6 21 years old 21 years old 48
Public K-12 School 12 15 18 years old 45
Individual (through stimulus test) 3 21 years old 12 36
Health care institution 0 6 9 15
other 3 0 0 3
Higher education 0 0 0 0
big company 0 0 0 0

A survey of 33 economists was conducted from July 17th to 20th.

Source: 55/IGM COVID-19 Economic Survey

“State and local governments will cause a huge drag on the economy because they account for a considerable share of expenditures and cannot really operate in a deficit. Their tax revenues have been severely hit. So far, Congress has done little to help,” Wright Say. He said that easing the state and local governments may play a lot in supporting the economy.

Other areas of focus that often appear in economists’ three priorities are funding small businesses (48%) and public K-12 schools (45%), and another round of personal incentive checks (36%). However, none of our economists thought that funding large companies or universities and other higher education institutions was a priority.

In addition to our usual questions about GDP in the second and fourth quarters, we also ask economists to predict real GDP growth in the third quarter in this survey. The results reveal the real “Second waveThe spread of coronavirus in the winter may slow economic growth.

On average, economists believe that real GDP will increase in the second quarter of 2020 (that is, as of June 30). Released later this month -Compared with the first quarter, the annualized rate dropped by 27%. They also believe that the real GDP in the third quarter will increase by about 8 percentage points over the previous quarter, and the upper limit is estimated to be 17%. The possibility of negative growth again is very small. But their forecasts looked bleak in the fourth quarter. The median forecast was 3%, the 90th percentile forecast was 9%, and the 10th percentile forecast was again red (-3%), even more so than the pessimists. pessimistic. the third quater.

Some of them reflect Increased economic activity in the summer (Relative to the early spring), even if the virus spreads across the country; given that bad economists believe that the second quarter GDP will end, the possibility of some form of third-quarter rebound is high. But the forecast also shows that the uncertain process is that the virus and the entire economy may dominate for the rest of 2020.

[Related: How Americans View The Coronavirus Crisis And Trump’s Response]

Robert BarberaEconomists at Johns Hopkins University say that part of the problem with forecasting quarterly changes is that month-to-month changes can be so extreme. His forecast for the third quarter is not very optimistic, because he expects most of the initial rebound will occur in May and June of the second quarter.He said that the third quarter may rise in August and September, and it looks much better than the second quarter, but this is partly because the second quarter is and so bad. Predicting the fourth quarter is even more difficult-partly because the economic rebound depends largely on the willingness of Americans to return to normal life.

Regardless of how the economic recession progresses, our economists believe that the United States may come due to a wave of large-scale personal bankruptcies in the second half of the year.In the first half of 2020, the total number of bankruptcy filings-the vast majority are individual filings-is actually under According to court data, compared to the first half of 2019, 23% From Epiq AACER. But don’t be fooled: this is almost certainly due to the heavy use of grace periods and extensions by creditors, and these extensions will eventually expire (if not already). In our survey, 67% of economists believe that compared with the second half of 2019, the total number of applications in the second half of 2020 will increase significantly. Only 6% think they will see the same year-on-year decline in the second half of 2020 as in the first half.

Overall, the economic situation depicted in this week’s survey is not brighter than in previous periods. The expert panel’s forecast for future GDP has hardly changed in the past two weeks, and experts remain vigilant, believing that the virus will wipe out any gains from the summer economy before the end of the year. But they also clearly believe that Congress has some tools available to avoid making recovery more difficult than it needs. The biggest question is-will decision makers use them?

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