A key part of the historic $2.2 trillion CARES Act was a broad expansion of unemployment benefits, benefits that expired July 31. The expansion gave every recipient an additional $600 and added about 13 million non-traditional workers such as Uber drivers and food deliverers to those receiving benefits. By the end of July, the program doled out about $270 billion.

At press time, there were a handful of efforts underway to extend benefits, some reducing the additional benefit amount to $300, some including return-to-work "bonuses" of $450.

President Trump said he is against extending the $600 benefit because it is a "disincentive to work." And it’s true, a full two-thirds of the 31 million unemployed make more staying at home and 20 percent earn twice as much or more than their typical salary, according to a research paper by the National Bureau of Economic Research.

Market research firm Cowen projected a total benefit level of $300 a week for unemployed folks. But as for what happens when an economy loses between $40 billion and $85 billion in monthly income, that’s uncharted territory. Just as the expanded program accelerated personal income by a historic margin (10.8 percent jump compared to the former high of 5 percent seen in the Great Recession stimulus), the end of the program will swing the other way.

According to Cowen, consumers will probably save less, spend less and some will go back to work. The firm estimates a 6 percent dip in personal income if there is no extension and a 3 percent dip in the $300 a week scenario—both compared to 2019. But given that it’s seen as bonus income to many, a lot of the stimulus went to savings, as the savings rate jumped to 32 percent in April. Without the large benefit, more people may return to work, though incentives to do so and how much of the economy is open will determine that.

The impact on spending will be damaging. Cowen estimates restaurants will see a 4 percent spending decline as the segment is highly correlated to personal income. Alcohol sales will shift to at-home occasions, further cutting a high-margin segment. Value retail will be affected greatly as many low-income earners saw the benefit windfall and will see the bust, as spending there is also highly correlated with personal income.

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