Coronavirus recession: No stimulus deal until September? What that means for you
There may not be another stimulus bill until mid-September, despite a simmering recession that economists say is the worst the US has experienced since the Great Depression of the 1930s. The US economy shattered records when it plunged 32.9% in the second quarter, according to data released by the Commerce Department (PDF) in August, and is only expected to rebound to the tune of 26.2% in the third quarter, according to a prediction model at the Federal Reserve Bank of Atlanta. The UK is also in a recession, following a record plunge, which is said to be worse than Europe’s and America’s financial woes.
Add these figures to record-setting unemployment numbers — a 10.2% US jobless rate (PDF) with 30 million receiving unemployment benefits — for a stark preview of what’s to come in the US if another round of stimulus checks never arrives and the federal unemployment enhancement and national eviction moratorium don’t get renewed.
What does the road to economic recovery look like from here? We’ve put together the latest news about the coronavirus recession, where to find help, what makes a recession and the government’s response. Note that this story is intended to provide an overview, not to serve as financial advice. It updates frequently as the situation develops.
Latest coronavirus recession news
- Despite widespread unemployment and a plummeting gross national product, stocks and home values are up across the board, prompting some to call the recession “over for the rich” while everyone else continues to struggle.
- Weekly unemployment applications fell below 1 million for the first time since March to 963,000, according to a Department of Labor report(PDF).
- The UK seems to have been hit hardest of any other nation in Europe or North America, with economic output plunging over 20% between April and June.
- The Commerce Department’s latest numbers (PDF) confirm two consecutive quarters of economic contraction — the definition of “recession” used by most economists.
- According to the World Bank, humanity has experienced 14 global recessions since 1870, the last being the financial crisis of 2007 to 2009. The organization projects that this one will be the worst since World War II.
Where to find personal financial resources to help you prepare
If you’ve experienced financial hardship as a result of the coronavirus recession, here are some tools to help you regain your financial balance.
- If you’re unemployed and need to apply for benefits, here’s everything you need to know about how to apply for unemployment, payments and more.
- For help navigating the various rent relief measures that might affect you, here’s our guide to eviction protections, rent freezes, landlords and the law.
- If you’ve fallen behind on your car payment (or might soon), here’s what you need to know about car payments, repossessions and what not to do.
- Are you worried about your investment portfolio or savings? Here’s what to prioritize during the pandemic.
- Here’s what to do if you’ve lost money in this volatile market.
- Here’s where to stash your money if you’re worried about market ups and downs.
- There might be another stimulus check coming. Here’s today’s updates on the second stimulus check.
When will the recession end?
Unfortunately, we don’t have answers to that question. From an economist’s point of view, a recession ends when certain market requirements are met. From a personal point of view, you might wonder most about your ability to work, pay your bills and secure your financial future.
Economists and experts agree that the economy won’t recover until the coronavirus pandemic is contained — without triggering another wave of infections when lockdown measures are released. That’ll happen either through herd immunity, an effective treatment for COVID-19, a coronavirus vaccine or some combination of all three.
Several vaccine candidates have shown promise in human trials. Even so, it may still be another year or longer before anything is widely distributed. The development of a coronavirus vaccine is fast-paced and details change daily.
How the government has tried to bolster the economy
The $2 trillion stimulus package passed as part of the CARES Act in March represents the US government’s first attempt at thwarting a recession. The economic relief law included stimulus payments of up to $1,200 for most US taxpayers, as well as a loan program for businesses to keep paying their employees.
A debate in Washington over a second stimulus check has ground to a halt as Congress began its late-summer recess, although there’s still a chance they might work out a deal before Labor Day. In the meantime, Trump signed a memorandum meant to defer payroll taxes Sept. 1 through the end of the year (although you may or may not have to pay back the difference eventually). Trump also ordered a $400 per week bonus on unemployment checks, but how such a bonus is to be paid out as well as the Constitutionality of the memo in general remain in question.
The Federal Reserve has indicated it will continue to hold interest rates close to 0% for the foreseeable future, which often has the effect of encouraging more borrowing, which leads to more spending — and more spending generally improves the economy.
How can I help?
It’s easy to feel helpless, but if you’re feeling financially secure or have time to give, there are ways to make a difference. My CNET colleague Katie Conner has some excellent recommendations for things you can do to help your local community and businesses, including no-cost contributions like online volunteering or donating blood, as well as ordering take-out or delivery, and buying restaurant gift cards.
Other local businesses like bookstores, gardening centers, toy shops and boutiques may have a website where you can support them with a curbside order, if they remain closed.
The best advice I’ve heard so far about how you can individually help prop up the economy is this: Spend to the best of your ability and within your means.