Federal Reserve Chairman Jerome Powell said that a Fed survey being released Thursday will show that 40% of American household that earn under $40,ooo a year jost jobs in March due to the coronavirus outbreak.
“This reversal of economic fortune has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future,” Powell said during a Peterson Institute of International Economics in Washington virtual event.
The numbers underscore perceptions that the pandemic and resulting shutdowns have impacted low-income Americans hardest and that these Americans are a major part of the current 14.7% unemployment rate.
“While we are all affected, the burden has fallen most heavily on those least able to bear it,” Powell said.
“Deaths of despair”
A new USA Today report said that there could be up to 154,000 additional “deaths of despair” from addiction and mental health problems that job loss and the isolation imposed during lockdowns can cause, according to a new study.
The British medical journal Lancet published the study, which said that longer lockdowns will result in higher overdoses, alcohol-related deaths and suicides. Preventing these deaths relies on getting economies reopened more quickly.
As of May 13, there have been 82,356 deaths attributed to coronavirus in the U.S., according to Johns Hopkins University, which is only slightly more than half of the “deaths of despair” predicted. While some states are beginning to lift lockdown orders and reopen businesses, others like New York, Pennsylvania and California have said that lockdowns will continue in at least some areas for several more weeks or months.
Is another stimulus the answer?
Powell thinks another stimulus package is the answer to disproportionate layoffs among lower-income households, the Hill reported, but another few months of lockdowns may cause millions more businesses to go under, severely undercutting the jobs that will be available when unemployment benefits end.
Certainly, $3 trillion in additional federal government debt will not help these low income workers because it will only add to government costs for years to come and lead to higher taxes and fewer helpful services.
While some families have great need of further government support, another set of direct payments like the $1,2oo per person payments already made will waste billions of dollars giving more money to people who are still working and don’t really need help.
Until Powell can identify exactly which stimulus measures would help the low income people impacted by the pandemic, his observations should remain just that, without becoming a justification for wasting the majority of another $3 trillion on people who are fine economically, along with more liberal Democrat priorities that never need to see the light of day.