RSM Economist Sees 3 Fiscal Cliffs Ahead For Nation's Unemployed

For the week ending July 4, the advance figure for seasonally adjusted initial unemployment claims was 1,314,000, representing a 99,000-claim week-over-week drop, according to the Labor Department. 

What Happened: Initial jobless claims are slowly decreasing, but it's still the 16th straight week of over 1 million new claims. Claims have now topped over 50 million in the last 16 weeks, which points to a long recovery ahead.

For the week ending June 20, 47 states reported 14,363,143 individuals claiming Pandemic Unemployment Assistance benefits, and 41 states reported 850,461 individuals claiming Pandemic Emergency Unemployment Compensation benefits.

Why It’s Important: Joe Brusuelas, chief economist at RSM, said the estimated 32.9 million people receiving some kind of unemployment aid has major implications. 

Three cliffs are ahead, the economist said: the July 28 expiration of the federal moratorium on evictions, the July 31 fiscal cliff regarding the CARES Act and the Aug. 8 expiration of the Paycheck Protection Program.

Failing to extend benefits would make little policy sense, he said. 

Lawmakers are debating a second benefit package before the summer recess begins. The White House has supported extending unemployment benefits but cutting back on the amount, while many Republicans have pushed for a “back-to-work” bonus to incentivize individuals to return to work.

Democrats have supported extending the current benefits until states fall below a certain unemployment threshold. 

What’s Next: Keep an eye on what policy is passed in the coming weeks. A long recovery is still ahead, and with states looking at a second wave of shutdowns, workers will need some sort of continued support.