According to numerous economists, if Congress does not agree to raise the debt ceiling, the federal government will not be able to pay all its bills. That default, which is projected on or around June 1, would plunge the U.S. into an instant recession.
One million jobs would be lost in the first week with nearly eight million jobs lost if a default goes on for multiple weeks. This is partially due to consumers pulling back on spending, impacting businesses’ ability to pay workers.
Federal payments to millions of working people, retirees, veterans and more would be delayed.
Sixty-six million people rely on Social Security each month to pay their bills and keep a roof over their heads. For 40% of recipients, Social Security makes up 90% of their monthly income. These payments would be delayed.
SNAP food stamp payments would be delayed, as would Medicaid payments to states and Medicare payments to hospitals and doctors―devastating to health infrastructure, especially in rural communities.
Two million federal workers, 1.4 million active-duty military personnel, plus government contractors would all see delays in payments. And veterans’ benefits, including disability payments and pensions would be impacted.
Meanwhile the stock market would take a severe hit, dropping anywhere from 33 – 45%, wiping out $12 trillion of household wealth, including retirement accounts.
The K-shaped recovery edition. COVID-19 daily infections are down over the past two weeks. Hospitalizations are down. Deaths are down, slightly. Vaccinations are on the rise – more than 22 million Americans have received their first shot, and the rolling average of shots per day has climbed to over one million. All of which is encouraging news.
But the economic news is not so encouraging. New information out this week confirms what many have feared: we are experiencing a K-shaped recovery. The top end of the economy continues to improve while lower earners fall farther and farther behind. The businesses hit hardest in 2020 – and those that continue to struggle today, if they even still exist – disproportionately employ women, people of color, and workers without college educations.
Vaccines alone won’t pull us out of this economic morass. Only swift, bold, and long-lasting action by Congress will do that, and that means passage of President Biden’s American Rescue Plan. But vaccines are key, as Federal Reserve Chair Jerome H. Powell noted this week, when he saidthere is “nothing more important to the economy right now than getting people vaccinated.”
That said, vaccines by themselves won’t put food on the table, open child care centers, or bring back the ten million jobs that have evaporated since the pandemic began. Along with the vaccines, we need to pass the plan now. You can tell your members of Congress to pass the plan here.
-34%/-2%
As of Thursday, January 28, new COVID-19 infections in the U.S. numbered165,073, a 34 percent decrease from two weeks earlier. 3,862 deaths were reported, down 2 percent. Tweet this.
3.5%
The U.S. economy shrunkby 3.5 percent in 2020, its worst performance since 1946. Tweet this.
45 weeks
Last week marked the 45th consecutive week that new unemployment insurance claims were higher than the worst week of the Great Recession. 1.27 million new claims were reported– that includes regular UI claims plus Pandemic Unemployment Assistance claims (gig/self-employed workers). Tweet this.
10%
The nation’s real unemployment rate, if we adjust the official rate with the decline in workforce participation along with the Bureau of Labor Statistics’ estimate of misclassification. Tweet this.
More than 20%
The Federal Reserve estimatesthat the unemployment rate for workers in the bottom wage quartile is more than 20 percent. Tweet this.
More than 1 million
In three of the biggest employment sectors for low-education (high school diploma or less) workers – construction, bars and restaurants, and hotels and motels – more than a million jobs were lost between December 2019 and December 2020.
3.9%/8.5%
The unemployment rate is 3.9 percent for those Americans able to work from home; among those who have to report to a job site, it is 8.5 percent.
Nearly 24 million
The numberof adults who reported their households did not have enough to eat during the previous seven days, according to Census data gathered January 6-18. That’s 11 percent of all adults in the U.S.
15.1 million
The numberof adult renters who weren’t caught up in rent. That’s one in five adult renters.
More than 80 million
The numberof adults who reported that it was somewhat or very difficult to cover usual expenses during the past seven days. That’s 35 percent of all adults.
January 29, 2021 