Consumers are anxiously awaiting both unemployment and federal stimulus funds as the number of jobless Americans rises exponentially as more small and medium companies are forced to shutter their businesses.
Over the past three weeks 16.5 million Americans filed for unemployment as the impact of the coronavirus created severe financial hardships for consumers who are already saddled with debt. More people are expected to file for unemployment in the ensuing months as larger companies cut their workforce.
Even after businesses reopen, many job losses will be permanent and finding another one quickly will not be a simple task.
“Once the economy restarts, the staggering unemployment will linger for months or even years,” said Greg McBride, chief financial analyst for Bankrate, a New York-based financial data company, in a written statement. “The massive number of suddenly unemployed and furloughed Americans speaks to the urgency of our economic predicament and the Federal Reserve is again responding in an equally massive way. The Fed has announced an additional $2.3 trillion in loans to support businesses of varying sizes as well as states and municipalities.”
The $2 trillion stimulus package, the CARES Act, passed by Congress, includes provisions for Americans, but a one-time payment of $1,200 will only tide people over temporarily.
A new Bankrate.com report finds that 31% of U.S. adults who anticipate receiving a stimulus check believe that the funds are insufficient to sustain their financial well-being for one month. Another 8% believe the stimulus money would not allow them to sustain their financial well-being at all, the survey said.
Half the people said the stimulus check will enable them to pay their monthly bills such as their rent or mortgage and utilities. The survey revealed that 41% said they would spend the money for day-to-day essentials such as food and medicine.
IRS Payments Sent
The IRS said the so-called “Economic Impact Payments” will be distributed automatically to most people beginning this week. Taxpayers who filed tax returns for 2019 or 2018 will receive the payments automatically. Individuals will receive up to $1,200 for individuals and married couples can receive a total of $2,400, plus $500 for each child.
Automatic payments will also be sent “in the near future” to people receiving Social Security retirement or disability benefits and Railroad Retirement benefits, the IRS said in a written statement.
IRS is creating a new tool so that people can check on the status of their payments called Get My Payment that should be available by April 17. It will provide people with the status of their payment, including the date their payment is scheduled to be deposited into their bank account or mailed to them.
This new tool will also allow people a chance to provide their bank account information online.
Updates from the IRS can be found on IRS.gov/coronavirus.
The Treasury Department and IRS also launched a tool so people who do not normally file a tax return can sign up for the stimulus check on the IRS website.
“People who don’t have a return filing obligation can use this tool to give us basic information so they can receive their Economic Impact Payments as soon as possible,” said IRS Commissioner Chuck Rettig in a written statement. “The IRS and Free File Alliance have been working around the clock to deliver this new tool to help people.”
State Unemployment Checks Could Take Weeks
People seeking state unemployment funds are facing a multitude of issues, ranging from websites that are down and prolonged wait times when they call. New York and California residents have reported multiple, even hundreds of attempts of utilizing state websites or calling state unemployment offices.
States such as Connecticut have told people to wait up to five weeks for their unemployment funds because of the surge of applicants.
The bill allows independent contractors and part-time workers as well as people who were recently hired to also receive the benefits.
Each state pays different amounts of jobless benefits. The typical amount is about half of an employee’s salary for a maximum amount of 26 weeks.
The federal stimulus bill extended unemployment benefits for an additional 13 weeks and unemployed people will receive an additional $600 each week through July. Some states have started sending out the federal supplement.
Consumers face tough choices for the remainder of 2020 as temporary forbearance programs for mortgage, credit card and student loan payments will be insufficient. Tax refund checks will provide a short-term boost for some households, but people need to take a hard look at their budgets and slash as many expenses as possible, said Daren Blonski, managing principal of Sonoma Wealth Advisors in California.
“Many people are facing hardships, but hopefully some of the workers that have been furloughed will be able to return to their jobs within a few months,” he says. "Cutting your expenses is tough, but make a list before you go to the store and only buy what's on the list. Try to only go shopping once a week. Find stuff around the house to sell online because you would be surprised what you can sell.”