Economic conditions on the backside of Forbearance

[Hueco]

3) Saw a recent article that some huge %age of the populace would have a hard time scraping up $500.
That's a really scary position to be in.

Probably this: 63% Of Americans Don't Have Enough Savings To Cover A $500 Emergency

Or this: Nearly 25% of Americans have no emergency savings

Lots of rent payments or mortgage payments being deferred right now. The Fed spent so much money to try to float people and where did it all go? Certainly not to the people, landlords, etc.

 

[Dinglenutz]

A little simple math says that if each taxpayer got an equal slice of $2.1T, we'd each have been blessed with a check of about $14K, or looking at it another way, that's what the cost to us per capita was. I know that it's not going to taxpayers and so on but the level of inefficiency that seems to be evident is pretty impressive.

 

[Medic!]

People are learning a hard lesson.

Before all is said and done. This will be our new anthem.

 

[The Heretic]

A little simple math says that if each taxpayer got an equal slice of $2.1T, we'd each have been blessed with a check of about $14K, or looking at it another way, that's what the cost to us per capita was. I know that it's not going to taxpayers and so on but the level of inefficiency that seems to be evident is pretty impressive.

Some of the package went to UI benefits - about $500B IIRC - probably some portion of that will not be spent for a couple of reasons:

1) The expanded benefits expire 7.31, but almost every state pays on a Sunday to Saturday basis, and 7.31 is a Friday, so they have said they won't pay the $600 fed benefit for that last week. That adds up when you have maybe 40 million people on UI - about $24B?

2) For both expanded and extended benefits, they will expire and people will go back to work.

I think a similar amount - about $500B went to stimulus checks?

The rest went to small business loans and other programs. So you can't just divide up the $2T+ between each taxpayer

 

[The Heretic]

Maybe some, but stats show most are not - that they have cutback on spending dramatically and putting cash into savings.

New threat to the economy: Americans are saving like it's the 1980s

Americans are slashing their spending, hoarding cash and shrinking their credit card debt as they fear their jobs could disappear during the coronavirus pandemic.

www.cnn.com

Which is smart on the individual level, not so good on the macro level. Long term it would be better, IMO, if the economy depended less on consumer spending (especially unsecured debt). I stopped spending so much back in December when the CEO of Daimler announced layoffs - I always payoff my CC debt each month too, but this next month will hurt (almost $4K in medical bills).

That said, defaults of various kinds are projected in the near term.

A cash cliff spells trouble for U.S. unemployed, and everyone else

Judith Ramirez is bracing for July. That's when the hotel housekeeper and her electrician husband - who have both been out of work for three months - expect their combined unemployment benefits to drop by more than half, and their deferred $1,500 monthly mortgage payment...

www.reuters.com

Lift to spending
Spending by low-income households recovered faster after the federal government began distributing stimulus checks in mid-April. The expiration of enhanced unemployment benefits on July 31 could hit low-income families the hardest.

 

[ATCclears]

Expect challenging economic conditions for the next five years.

snippet:

• The demand destruction from Covid will last for years.
• Demand destructuction is greater than Covid stimulus.
• Buildup up debt is inherently deflationary.
• Demographics are deflationary.
• By bailing out failed corporations, the Fed is creating more and more zombies.

Unprecedented Recession Synchronization and What it Means

Deflationary Consequences Lacy Hunt at Hoisington Management explains the deflationary consequences of the current global situation in its Second Quarter 2020

www.thestreet.com

 

[Dinglenutz]

So you can't just divide up the $2T+ between each taxpayer

Well, that's pretty much how it's going to have to be paid.

 

[The Heretic]

Well, that's pretty much how it's going to have to be paid.

Paid for yes, paid out no.

 

[HaveGun]

How about instead of just sending out blanket $1200 checks, they just stop taking out federal taxes out of paychecks for a couple of months?

And for those that were put out of work due to the virus, figure what their taxes were for the previous 8 weeks and refund that amount?

Reward those that were actually contributing to the economy.

 

[The Heretic]

How about instead of just sending out blanket $1200 checks, they just stop taking out federal taxes out of paychecks for a couple of months?

And for those that were put out of work due to the virus, figure what their taxes were for the previous 8 weeks and refund that amount?

Reward those that were actually contributing to the economy.

That is what is called a payroll tax holiday and Trump is pushing for it.

What’s So Wrong About Trump’s Payroll Tax Cut Call?

Not now, but later, a payroll tax cut might indeed be appropriate.

www.forbes.com

So not sure about that.

That said, people who are working need less stimulus than people who are unemployed (disclaimer: I am unemployed and collecting UI benefits).

The upside of unemployment benefits is that the unemployed are more able to continue to pay their bills - rent/mortgage, utilities and food. This keeps the economy rolling along better than if they default on their bills because they don't have the $ to pay them.

I support an extension (longer term of benefits) more than I do an "expansion" (more money). Forty percent (or more) of the unemployed have lost their previous job permanently - i.e., they won't be going back to their old job (I won't). In general, it will take longer for those unemployed to find a new job (the rule of thumb is for every $10K of income from a job, it takes a month to find a new job - I will probably never find another job since I am 66 and in my profession employers have a strong preference for employees half my age, plus most employers do not want to hire someone who is as close to retirement as I am).

If we are going to into this with the goal of keeping people and the economy afloat, then what we did during the Great Recession seemed to work towards that end; for a given state, there were extensions of UI benefits, depending on the unemployment rate - higher rate equaled longer terms for benefits. Also, they subsidized COBRA - paying about 80% of the cost, to keep people insured, and they did it for a longer term (I think it was six months normally back then, I think it is a year now).

As a Libertarian I generally do not support government subsidies and using taxes for social ends.

But if we are going to subsidize people, then I strongly prefer that it be targeted to those people who need it.

 

[Dinglenutz]

As a Libertarian I generally do not support government subsidies and using taxes for social ends.

Same here, however if the government tells businesses they cannot do business, that's a taking and should be compensated. I don't agree with it being done to begin with but if "we" decide to do it "we" should pay for it.

I'm in favor of more trust in the citizens and a lighter hand from government, but I am not "we" it seems.

 

[Medic!]

Ten year U.S. Bond is below .6 today.

Value of the dollar is down.
Hope we didn't miss a collapse their, like we missed the first one in our housing until it happened.

Gold just broke $1900 an oz. nearing it's all time high.
Could set a new high later today or in the next couple?


As to forbearance?
It will be interesting to see what our homeless numbers are in the coming year?

 

[ATCclears]

The great acceleration

 

[cookie]

Probably this: 63% Of Americans Don't Have Enough Savings To Cover A $500 Emergency

Or this: Nearly 25% of Americans have no emergency savings

Lots of rent payments or mortgage payments being deferred right now. The Fed spent so much money to try to float people and where did it all go? Certainly not to the people, landlords, etc.

It is called living beyond your means. I am having legal procedings now to evict a non rent payer.

 

[The Heretic]

Yikes! Yelp says 60% of restaurant Covid-19 closures are permanent

A new national survey spells more bad news for the restaurant industry.

www.cnn.com

 

[dobeman]

Ten year U.S. Bond is below .6 today.

Value of the dollar is down.
Hope we didn't miss a collapse their, like we missed the first one in our housing until it happened.

Gold just broke $1900 an oz. nearing it's all time high.
Could set a new high later today or in the next couple?


As to forbearance?
It will be interesting to see what our homeless numbers are in the coming year?

in my portfolio of 401k funds, I have some allocated in two gold related funds. They are up +140%. LOL. I am well enough diversified, but how often do you get 140%.

 

[HaveGun]

Now would be a good time to invest in some companies that manufacture gold prospecting supplies, as I'm sure more people will be rushing to purchase pans, sluices, and dredges.

 

[Angie]

We just refinanced our house and have been saving like crazy for when the real estate market inevitably crashes. For the first time, we might actually be able to take advantage of it. It's going to be a while though if they keep offering this forbearance. We can wait.

BTW, I also use my CC for points and pay it off every month. We were going to go to Italy this summer with our flights paid for with points. If they let us go next summer, I can probably pay for most of the hotel/Airbnb locations also. Free two week trip to Italy? Yes, please!

 

[ATCclears]

U.S. Economy Contracted at Record Rate Last Quarter; Jobless Claims Rise to 1.43 Million

 

[ATCclears]

$21.5 billion owed in back rent.

It will be a challenging Fall and 2021 - not just for individuals, but for landlords, banks, utilities, and more. The trickle-down effect.

U.S. renters owe $21.5 billion in back rent; Republicans offer no eviction relief

More than $21.5 billion in past-due rent is looming over Americans struggling to make ends meet, global advisory firm Stout, Risius and Ross estimated on Wednesday, as Republicans and Democrats fight over a new COVID-19 relief package.

www.reuters.com