Loss of added unemployment benefit appears NOT to be impacting spending

The economic impact of any single government policy is very hard to unravel. The Rio Grande Foundation and many economists both in and out of New Mexico predicted major budget issues for State and local governments. At this point that hasn’t happened in New Mexico and most other states.

Part of the issue is the massive $2.2 trillion federal CARES Act and related “easing” by the Federal Reserve Bank. Included in those policies was a generous $600 add-on for unemployment benefits that ended at the end of July.

As this article from Marketwatch noted, “Some economists predicted that one consequence of ending the $600 weekly benefit would be that Americans would spend less money, which would harm the already-struggling U.S. economy.” We know that Gov. Lujan Grisham and the Democrats in Congress pushed VERY hard to extend the unemployment benefits AND even pass a massive new federal spending bill called the HEROES Act.

But, without agreement in Washington, there was no major “stimulus,” just a pared down $300 unemployment bump from the federal government (Gov. Lujan Grisham declined to use State money to add $100 to the unemployment checks).

So far, the reduced unemployment checks don’t seem to be harming consumers. Again according to the Marketwatch story, “Since the $600 benefit expired though, Americans have been spending slightly more, according to spending data of more than 30 million Chase credit and debit cardholders.”

Personal income and spending June 2020