It’s likely that Congress will extend the enhanced unemployment benefits that are set to expire at the end of July, albeit at a less generous level than the current $600 per week. It’s also likely that the decision on an extension will come so late that there will be delays, as state unemployment offices scramble to implement the new guidelines. “There’s going to be at least a couple of weeks where the big ongoing fiscal support provided by the federal government — these emergency unemployment payments — goes away,” says Ernie Tedeschi, a former Treasury Department economist. He notes that the other chief fiscal supports from the CARES Act passed in March — $1,200 rebate checks to most adults and forgivable PPP loans to businesses — have largely been disbursed, so the economy is already getting far less aid than it was during the spring.
Even if Congress does decide to extend unemployment benefits, the ongoing uncertainty will hurt the economy: Households unsure of how much they will collect in benefits later this year may be less inclined to spend now. But assuming we do get a pretty large fiscal package — say, more than $1 trillion, including some unemployment enhancement and another round of rebate checks — the rickety execution of the aid will be a significantly smaller drag on the economy than the virus itself.