Posted on Monday, August 10, 2020
More than a week or two after the expiration of the extra $600 weekly federal unemployment insurance benefit that was enacted in March in the CARES Act, we can see the clear drop-off in benefit payments. The Treasury Department releases daily the nationwide amount of combined state and federal unemployment benefit payments, and benefits have dropped from an average of about $5 billion per business day in June and July to about $3 billion daily in early August (see chart below). The daily tabulations do not identify the separate federal/state allocation, although the Treasury Department does release the monthly allocation a week and a half after each month ends. We can of course assume that the federal share is dropping quickly. In both May and June the federal share of the total was about 70 percent, so that suggests that more decline in payments in coming days is likely.
We’ll be able to see in the daily data if this past weekend’s Presidential Memorandum providing a framework for additional unemployment insurance benefits, or even a future legislative agreement between the Administration and Congress, brings about a rebound in unemployment benefit payments at some point. The effects of the Presidential Memorandum will presumably take a while to have much effect, and as structured the Memorandum only provides enough federal funds to last for perhaps a little over a month if all states participate by raising benefits as specified. And added to those factors affecting future benefits is the hope that continued economic recovery will cause unemployment benefits to decline as more people become re-employed.