In ‘Simulated’ Economy, 3/4 Of Laid-Off Workers Get Benefits Exceeding Their Former Wage
Right now, the Fed and Congress are playing tug-of-war with an "invisible enemy", as the president refers to the coronavirus.
At stake is the economic future of America and nearly everyone in it.
April served notice that extreme monetary accommodation and the promise of essentially unlimited Fed support can bolster risk assets and preserve market access for corporate borrowers.
But what of corporate earnings? And how about the 30 million newly jobless? What is it, exactly, that we're all bett
Have to get the schools and daycares open. Everybody is hoping we pull this off. Workers have to be able to get to work. A vast majority are not interested in unemployment no matter how good the money may be.
Not to mention lost tips that make up the vast majority of much of the service industry income. So the millions of restaurant workers that are receiving unemployment are receiving much less in unemployment benefits than they would earn actually waiting tables. Seems to me that Goldman is failing to consider income that is largely under the table, so to speak.
Agreed. And further, even in the most liberal of states many don’t qualify for unemployment and in plenty of states there are extensive restrictions. That said, we are very lucky the Case Fatality Rate appears to be much lower than initially feared, which means we may be able to get all the workers back in their traces before the machinery grinds to a halt.
I guess if they can make that type of system work without consequence the only comments anyone could make would be idiotic by default..
Howard Marks did however nail it on that last quote saying in effect ‘you can’t eat money’….
PPP – Piss-Poor Plan?
Hmm, hard to square this with other reports of unemployed not getting benefits or able to file claims and businesses not getting PPP. Maybe those are just timing effects, i.e. Goldman report describes situation when the IE claims are processed and benefits are being paid, and when PPP loans are processed and funded.
It’s hard to imagine that when push comes to shove, equity will not be left out to dry. Something has got to give?
Certainly the effort is admirabe in keeping people afloat, and of course needed to be done considering it was the gov forcing work to stop. Having said that are these workers making 106% on benefits the main drivers of economic growth in this country? Is the virtuous cycle of asset price inflation not going to be affected for a year or two to come? Is household wealth not going to be severely impacted? Savings rates? Property values?
It’s one thing to provide a bridge, quite another to support late cycle asset prices