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Some startling numbers from the Bureau of Economic Analysis were released Friday showing personal income rose by 10.5% in April.
Also, last month about 20 million people in the U.S. lost their jobs as the coronavirus pandemic hit many businesses. But people still had more money in their pockets than a month earlier.
At the end of every month, the federal government adds up all of the money we’ve made that month from wages, interest, dividends and even government benefits. Then the Bureau of Economic Analysis spits out the personal income number, showing how much income went up or down. It doesn’t usually make headlines. But the April number made economists’ jaws drop.
“It tells us this is a very weird moment,” said Jason Furman, a Harvard economist and former chair of the Council of Economic Advisers. He said incomes went up last month because of the $1,200 relief checks most U.S. adults are getting. Plus, the government tacked an extra $600 a week onto unemployment payments.
“The government has protected people’s incomes from the large decline that otherwise would have been caused by the economy,” Furman said.
U.S. workers have filed more than 40 million unemployment claims since the coronavirus pandemic hit. Furman said government benefit payments rose in April by a whopping 90%. Ann Owen, an economist at Hamilton College, said without the government help, the April personal income number falls a lot.
“Income for the month of April would have gone down substantially,” she said. “Instead of being up 10%, we would have been down roughly 5%.”
Most of the relief checks have already been sent out. So what will personal income look like for May? Ernie Tedeschi, policy economist at Evercore ISI, said the personal income number for this month will probably make headlines again because it will drop.
“Because these stimulus payments are one-time, and after they’re sent out, they go away,” Tedeschi said. “It’s not clear if Congress is going to do another round at all, but we’re at the end of May. We know that there’s not going to be another round in May.”
Tedeschi said the government will keep adding the $600 to weekly unemployment payments, but that’s set to expire at the end of July.
Are states ready to roll out COVID-19 vaccines?
Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.
How is the service industry dealing with the return of coronavirus restrictions?
Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.
How are hospitals handling the nationwide surge in COVID-19 cases?
As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.
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