Unemployment Benefits Impacting the Stock Market

The Congressional Budget Office expects a gradual recovery rather than the originally proposed V-shaped recovery. (Photo courtesy of the CBO)

By Fiona Liu
Money and Investing Writer

Since the start of the pandemic, about thirty million Americans have lost their job. This is a record high for the country, leaving many Americans relying on weekly stimulus checks to pay bills in order to pay for basic necessities.

The Congressional Budget Office expects the employment rate to remain at an all-time low for the rest of 2020 which is about ten percent right now. The CBO does not expect this number to decrease by much within the next year. The road to recovery for the economy is going to be gradual rather than V-shaped.

Many would assume that this seems paradoxical as the economy is already slowly opening up throughout the country. But the problem lies in the demand for certain services. Americans are becoming more careful about what activities they choose to engage in.

People are limiting their activities and taking more precautions. The possibility of a second wave is keeping Americans circumspect of the choices they are making. The demand for employees is declining in many industries based on directives like limited dining and decreased demand for services.

With millions of Americans unemployed, the government passed a stimulus check, leading to an outpour of billions of dollars into the economy. Congress has passed massive stimulus bills for large corporations, banks, small businesses, and individuals.

The check is not enough to replace the lack of activity in the economy as the $600 stimulus cannot replace the money Americans would have spent with their income before covid-19.

Less disposable income for consumers results in decreased spending and lower sales for both public and private businesses. Disappointing earnings would therefore lead to poor stock performance.


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