The Indicator from Planet Money - Roller Coaster Economy (Scream Inside Only)

As Democrats, Republicans and the President fight about how much support to give laid-off workers during the pandemic, we take the temperature of this up-and-down economy.

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Hamlin is Patty and Carter fear. This is the indicator from Planet Money. If you think about it, the path of the economy is followed ever since the coronavirus pandemic hit has been kind of bizarre. It hasn't been like a normal recession where there's this big decline that can last a year or longer and then is slow and steady recovery until eventually the economy grows back to where it was before the recession. But it says there was this massive initial clocks back in March for pandemic hit but then a recovery started on this right away around April and May the number of states began reopening their economies that early recovery was aided by trillions of dollars from the federal government and injection of money that was approved in legislation that was passed by Congress and the president but his appendix urged again in the early summer. Some states were forced to close down parts of their economies again, and that is hampered the recovery while the economy still in terrible shape way worse than it was.

Before the pandemic arrived. I know of course a lot of the money from that earlier legislation has run out which means that the economic recovery is threatening to stall just as its key support is expiring great timing Republicans and Democrats in Congress have been debating. What should go into a new stimulus bill, but there's no deal Insight over the weekend President Trump executive action unilaterally without Congress try to get certain Financial benefits to household but the constitutionality of those actions has been questioned by both Republicans and Democrats in Congress. And in any case these actions would not do nearly as much as another bill from Congress could get on the show. We are presenting three new indicators that tell the story of this bizarre recovery and which also showed just how much the recovery has depended on the federal government's help and what might happen to the economy if Congress does not arrive at a deal soon, and that support is not reinforced.

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Okay, tedi's first indicator comes from Daniel Alpert. Dan is a senior fellow at Cornell University. And with the help of a polling company called r i w i d did a big survey of about 6000 randomly chosen people in the US and what are the things they wanted to know was the effect of a government program called the payroll Protection Program also known as PPP the PPP was part of the big stimulus bill passed in March and Allied small businesses to borrow money through bank loans that were guaranteed by the federal government. If a business is used most of the money, they board on the program to keep paying that workers. They wouldn't have to pay the money back. That was the deal. So lonesome be forgiven as the money started going out in april-may Dan says the program seems to be working. Well was that the payroll Protection Program was in fact working as it should have been employers were repay whirling their workers many of them. We're not calling their workers actually back.

Work they were just paying them in order to obtain loan forgiveness under the PPP program that money started running out for the survey asked workers who were laid off early in the pandemic and then rehired whether or not they've been able to keep their jobs scare us because 31% of the people who were rehired by their employers and being paid again for a. Of time where again laid off 31% of people who have been rehired by their employers were laid off a second time. It's quite a figure about a third of people who had been laid off and then rehired within laid off again. It's really astonishing and also the PPP program just expired. So if either the economy does not start improving again, or

Small businesses. Don't get more help from the government. There could be even more layoffs to come moving all night or second indicator that comes from Matt Kline Massey economics commentator of Byron's and the Kawartha trade Wars are class Wars amount was interested in calculating how much the money from both the payroll Protection Program the PPP from the expansion of unemployment benefits that actually helped workers reminder the government increased unemployment benefits by $600 a week as part of the same stimulus bill that also included the PPP and specifically Matt estimated how much those two programs were boosting the amount of money that workers including unemployed workers were getting each month. And here's what Matt found. So in June total labor income was 980 billion dollars.

It would have been only 903 billion dollars if it hadn't been for these two government programs workers of raw and also people who had been working but we're laid off they were getting 9% more money than if these programs had not existed. And of course that 9% was mainly concentrated in people who really needed the money the unemployed so that is our second indicator 9% and is a share of the economy that is actually a huge amount of income support. But just like the PPP the expanded unemployment benefits have also just run out and this is Matt worried about what's going to happen to all those people who are receiving them. If you didn't add the $600 then the average person getting unemployment insurance would only be getting about $300 a week. There's a lot of variation across States but on average about $300 a week at $300 a week is basically impossible to live on an extra $600 is the difference between being impoverished and

Living well, but at least living no reasonably. Well, I'm being able to sustain yourself in it in a reasonable way indicator comes from Heather Boucher. She's an economist on the president and CEO of the Washington Center for Equitable growth. That sounds like a think tank you'd be right if I think tank and Heather's indicator is a by state and local governments. And here it is as the economy gets worse for everyone single percentage point. The unemployment rate goes up. You can expect the money that state governments collect in taxes to go down by almost 4% right now the unemployment rates by 6 percentage points higher than it was back in February before the pandemic hit which means state governments could be facing the client's in that tax revenues or perhaps 20 to 25% in a similar Dynamic also applies to local governments, like City governments the economy gets worse. There's less money to text so they collect less money all of which means it's state and local governments are going to have to

Turn off some of the millions of public school teachers and firefighters and policemen sanitation workers at the employee and not only are these workers going to lose their jobs. They also will not be able to provide services at exactly the time when people are actually relying on them even more than they were before the pandemic Heather says so you think about schools but you're having trouble reopening this fall for those places that do reopen in for this places that don't it is going to take extra time and resources for those teachers to figure out how to do new lesson plans online or to figure out how to do you have children safely in the classroom all that's going to take more resources and yet states are experiencing the need to cut back with more money the state and local governments will be facing combined shortfalls in the hundreds of billions of dollars. In addition to layoffs. These governments may also try other ways of rebalancing a books at a point site. That's exactly what they did after the Great Recession of 2008 and that decline in Revenue at the state.

Men today make College more expensive and they cut back on the aid. So they're real consequences to this indicator for not just little kids but also for all those kids who are doing school at home right now for high school and college. They're going to have to pay more for it most likely so there you have it for the strange and difficult Economic Times. We are living in

we're going to push details of each of these indicators in the show notes and NPR. Org money does episode of the indicator was produced by Darren woods and fact-checked by Brittany Cronin indicators editor when he's not posting is Patty Hirsch indicator is a production of NPR.
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