The expiration of unemployment benefits has already put a squeeze on the U.S. economy, economists at Deutsche Bank say.
The $600-a-week supplement to unemployment benefits issued during the coronavirus pandemic lapsed at the end of July. President Donald Trump on Sunday signed a measure offering what amounts to a $300 federal boost to the benefits, though the funds may take more than a month to arrive.
Congress' failure to renew the benefits has resulted in reduced consumer spending.
"The evaporation of these benefits highlights near-term downside risks to consumer spending, particularly for lower-income households, which have been a critical engine of the recovery despite being disproportionately more likely to lose a job during the pandemic — a testament to the effectiveness of the income supplement," the economists noted per Axios.
Consumer spending in June was 5 percent above pre-Covid levels, fueled by the largest government stimulus in U.S. history, according to Forbes.
Republican and Democratic lawmakers continue to clash over federal unemployment benefits with no end in sight.
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