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Sunday, November 22, 2020

Two Key Economic Dates in December

by Calculated Risk on 11/22/2020 09:46:00 AM

December 12th: Possible Government shutdown. From the WaPo: White House chief of staff ‘can’t guarantee’ U.S. government will avert December shutdown

Congress and the White House have until Dec. 11 to approve new spending legislation to prevent the federal government from shutting down in the middle of a pandemic and amid a surge in coronavirus cases. Meadows said he was hopeful an agreement would be reached but did not rule out that an impasse. There has already been two government shutdowns during President Trump’s four years in office, one lasting more than a month.
It is possible that there will be a shutdown from December 12th through January 20th. This would eclipse the previous longest government shutdown of 35 days in 2018-2019.

December 26th: End of CARES Act provisions. There are two COVID related unemployment programs that end on December 26th.

The first is the Pandemic Unemployment Assistance (PUA) Program. This is a special program that provides up to 39 weeks of benefits for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance.
PUA is not payable for any week of unemployment ending after December 31, 2020. Accordingly, in states where the week of unemployment ends on a Saturday, the last week that PUA may be paid is the week ending December 26, 2020. For states where the week of unemployment ends on a Sunday, the last week that PUA is payable is the week ending December 27, 2020.
As of October 31st, in the most recent report (lags weekly claims), there were 8.7 million receiving PUA benefits (there are questions about these numbers).

The second is the Pandemic Emergency Unemployment Compensation (PEUC) Program. This program "provides up to 13 additional weeks of benefits to individuals who have exhausted their regular unemployment compensation (UC) entitlement". Just like the PUA, this program ends on December 26th. There are currently 4.4 million people receiving these extended benefits, and this has been increasing sharply. On October 1st, about 1.8 million people were receiving benefits from the PEUC, so this has most than doubled over the last month as people exhaust their regular benefits.   This number will probably continue to increase over the next month.

Note that if people get laid off again, as COVID surges, many more people could exhaust their regular benefits.

So there are significant fiscal issues that need to be addressed in December.