Study: COVID jobless benefits boosted spending for millions

When the health crisis turned into an economic recession, Congress boosted weekly unemployment benefits by $600 to help Americans suddenly out of a job.

And new research out Thursday showed those who received the supplemental benefit actually spent MORE than when they were gainfully employed.

The JPMorgan Chase Institute analyzed financial transactions for 61,000 households that received unemployment benefits between March and May.

Spending dropped for all households as the pandemic prompted widespread shutdowns. But then households that began receiving enhanced benefits started spending 10 percent more than they did before the pandemic.

The research found that the biggest rise in spending came from households that earned the least before supplemental unemployment benefits kicked in.

The findings illustrate how significant the $600 may have been to millions of recipients, but also how meager their wages were even before the current crisis.

Data out Thursday from the U.S. Labor Department showed another 1.3 million people filed for new jobless claims last week.

More than 30 million Americans are estimated to be receiving unemployment benefits. The $600 supplement is due to expire at the end of July.

When it does, it could trigger significant pain for millions of families, a sharp drop in consumer spending, and a potential shock for the U.S. economy.

The researchers wrote, “Our estimates suggest that expiration will result in large spending cuts, with potentially negative effects on both households and macroeconomic activity.”

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