Why I'm worried about the end of July
Welcome to “Not Pretty, Not Rich,” a newsletter meant to keep you up to date on what’s happening in the markets and economy, and what you can do to take advantage — if anything. I’m not a financial expert or professional, so don’t take anything contained in this newsletter as advice. It’s also unaffiliated with my employer, and all views contained within are my own.
It’s Friday, June 26.
The U.S. has found itself in quite the pickle when it comes to dealing with the coronavirus pandemic. Cases are rising in many states, including Texas and Florida, and as a result, some parts of the country may need to go back into lockdown.
The situation is getting worse, and the federal government has also decided to end funding for testing in some states. The problem isn’t going away, to sum things up, as a lot of people had hoped. That could mean trouble in weeks and months ahead, as some businesses may need to close back up and quarantine guidelines may need to be reintroduced.
Again, this will likely all be location-dependent. Where I live, just north of New York City, things are more or less the same as they’ve been for three months now. Almost everyone wears a mask everywhere they go, and I assume that’ll be the norm for quite some time.
But as far as these other states now dealing with outbreaks, it’s hard to tell what happens next. Governors of states like Texas and Florida took risks by being fairly lax with their approach to handling the virus, and it’s blowing back on them now.
We’re approaching 125,000 deaths nationwide due to the pandemic, 1.5 million people applied for jobless benefits this week, and overall, things are not trending in a good direction. So, yeah, quite the pickle.
The end of July could be ugly
While the situation worsens on the pandemic front, all of us should be preparing for what’s going to happen in the coming weeks and months. Roughly a month from now, at the end of July, things could get particularly ugly as the extra $600 per-week unemployment benefit sunsets.
This benefit, which was a part of the $2.2 trillion stimulus package passed back in March, has helped keep a lot of people afloat during the past few months. It’s also given some people a lot more money than they earn by actually working, which has caused some problems for businesses that are trying to get employees to return to their jobs.
While some ideas have been floated to either extend or replace the benefit — a “return to work bonus” of $450 has been proposed, for example — one of the big reasons the economy hasn’t completely fallen off a cliff is that people who’ve been laid off or furloughed have had this extra cash.
Now, if it goes away, and the country is forced to go back under large-scale lockdown again, we could have some very serious problems. The president has said that there are more stimulus checks on the way, but since he offered absolutely no details on it, I’d assume it’s not going to happen until more concrete plans surface.
There’s another thing to consider, too: Payroll Protection Program (PPP) loans are going to run out. PPP loans were another element of the CARES Act (the March stimulus package) that gave employers forgivable loans to keep employees on the payroll. It seems to have been successful, to a wide degree, too. But that money’s going to run out, which could cause another wave of layoffs.
Again, things could change if Congress takes action, but right now, we’re on rough path.
Where to save your money
Given the uncertainty with the pandemic and the government response to it, it’s a good idea to save whatever money you can now because things could get worse. I’ve said this before, but with the number of cases ticking back up and no real coherent strategy or plan for dealing with it, it’s not unrealistic to think that millions — tens of millions, even — could be without income for a while.
So: Save, save, save. But given that interest rates are so low, your bank may not be giving you much, or anything, for stashing your cash. I recently talked to some experts about this, and they all say the same thing, which is to shop around for a high-yield savings account at an online bank.
Online banks generally have higher interest rates for their savings accounts, and it’s also a good idea to deposit your savings in a bank or credit union other than where you do your primary banking. It’s out of sight, out of mind, and it’ll take you some extra effort to dip into it.
Parks and Rec fans:
As always, thanks for reading. Wear a mask.