Anonymized bank data shows what happened next, as balances shrank and hopes dimmed for action from Washington.
The $600 weekly unemployment benefit the federal government funded this year was a remarkably effective expansion of the safety net. It helped pay many workers more than their lost wages. It enabled families to spend more than during normal times. It even allowed households to put away savings as the economy was teetering.
Then the money stopped at the end of July. And it’s clear, looking back, what happened next: Workers quickly burned through the reserves that the aid had given them. Of the savings many households were able to build up over the course of four months of unusually generous government help, much of it was gone by the end of August.
That picture, using banking data from about 80,000 households receiving unemployment and analyzed by researchers at the JPMorgan Chase Institute and the University of Chicago, shows that unemployed workers steadily built up their checking account balances this summer. The median account had more than twice as much money in it at the end of July as at the start of the year. When the benefits expired, those balances swiftly dropped, wiping out most of the accumulated gains. Continue reading.