Quote:
Originally Posted by Polka Dot
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I tend to agree, slightly taken out of context. For those who don't want to scroll thru the pages below is the paragraph referenced.
Effects on Consumption
When people become unemployed, they generally consume fewer goods
and services. To pay for food, housing, and other living expenses while
unemployed, people can draw on their savings, borrow money, sell assets
(such as cars or jewelry), or use funds received from other people or the
government. Many unemployed people have little or no savings and would
face high interest rates on loans. Some people could draw on retirement
savings: The CARES Act allows people affected by the pandemic to
withdraw from tax-preferred retirement savings accounts without incurring
a tax penalty.
The additional $600 per week in unemployment benefits under current law
allows people to continue to consume goods and services that they might
otherwise be unable to afford and to save for future contingencies. The
average amount that recipients spend on food, housing, and other goods and
services is, in CBO’s assessment, closer to what they spent when employed
than it would be without those additional benefits. CBO anticipates that if
the additional $600 per week was extended to the end of January 2021, that
pattern would continue—in part, because the extension would allow people
to make more payments on loans and therefore have greater access to credit
in the future than they would have otherwise.
Funding the additional unemployment benefits would, however, increase
the federal budget deficit. In CBO’s assessment, larger deficits tend to slow
the growth of the economy in the long term, thereby reducing overall
income and the consumption of goods and services in the future.
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