America Officially Enters a Recession
If it wasn’t clear in May that the economy was on a steady downward spiral, the statement announcing that America is officially in a recession opened the nation’s eyes to the severity of the economic impact of COVID-19.
The Business Cycle Dating Committee of the National Bureau of Economic Research released an announcement on June 8 that the rapid decline in employment, demand and production across the nation has pushed the U.S. economy to a tipping point. According to the statement, the economy hit a peak in February after a record-breaking expansion that began in June 2009.
It’s significant to note that while the committee points to February as the month the economy peaked and the recession began, the quarterly peak came at the end of last year. After the economic halt brought on by COVID-19, the gains in Q1 of 2020 turned negative, launching the U.S into a recession that was officially declared in early June.
Despite losing more than 22 million jobs in March and April combined, the committee speculated that this recession could be short-lived after seeing a sharp increase in May’s employment numbers. Forecasters believe they will see output growth during the third quarter, which began on July 1. However, the sudden rise in Coronavirus cases across the country could have the opposite effect as states decide to close businesses again.
$3 trillion HEROES Act Proposed for Second Round of Financial Aid
If you were one of the 159 million people to receive a stimulus check from the IRS, congrats! If not, you might still have a chance.
When the CARES Act was passed in March, many assumed COVID-19 would be long gone by late June. But as cases continue to rise and businesses remain closed, Americans are pleading for additional financial help. The government has responded through the proposed HEROES (Health and Economic Recovery Omnibus Emergency Solutions) Act.
Here is what will be different:
- This act will provide $3 trillion in financial assistance to businesses and individuals, $1 trillion more than the aforementioned CARES Act.
- Each member of the household (including children) will receive $1,200. Income thresholds will remain the same for both singles and married couples. Total payments per family will be capped at $6000.
- The HEROES Act will broaden its reach to include all dependents. This means that those dependents over the age of 17 will be eligible for a $1,200 payment.
- Legal immigrants will only be required to produce a “taxpayer identification number”. The CARES Act required a social security number, which excluded many individuals with Green Cards. This amendment was made in response to concerns over discrimination.
The bill was passed by the primarily democratic House of Representatives last month and is now in the hands of the Senate for deliberation. It’s likely the bill will undergo several amendments before being passed.