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Research

The unemployment benefit boost: Initial trends in spending and saving when the $600 supplement ended

October 15, 2020

Unemployment benefits have played an unprecedented role in the U.S. economy as a result of record high job losses and the authorization of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. We present evidence that the increased unemployment benefits boosted both spending and savings among the unemployed. We also demonstrate that upon the expiration of the $600 benefit supplement in August, families receiving unemployment benefits sharply cut spending and dipped into savings. The spending of jobless workers in August had fallen back to pre-pandemic baseline but not yet plateaued. Eventually, without further government support or significant labor market improvements, jobless workers may exhaust their accumulated savings buffer, leaving them with a choice to further cut spending or fall behind on debt or rent payments.

Authors

Diana Farrell

Founding and Former President & CEO

Peter Ganong

Assistant Professor at the University of Chicago Harris School of Public Policy

Fiona Greig

Former Co-President

Max Liebeskind

JPMorgan Chase Institute, Consumer Research Associate

Pascal Noel

Neubauer Family Assistant Professor of Finance at the University of Chicago Booth School of Business

Daniel M. Sullivan

Consumer Research Director

Joseph Vavra

JPMorgan Chase Institute Academic Fellow