Even as the market mania continues over hopes for a coronavirus vaccine, the economic devastation caused by the government’s response to the pandemic continues to ravage the economy.
Seventeen million households are behind on rent or mortgage payments, and nearly 6 million Americans say they face eviction in the coming months.
According to a survey conducted by the US Census Bureau, about 5.8 million adults say they are quite to very likely to face an eviction or foreclosure in the next two months.
A CARES Act program allowing homeowners to suspend mortgage payments for up to a year is about to expire. Some owners of the program could face foreclosure as early as March. Meanwhile, the CDC’s national suspension on evictions will expire on December 31. Millions of Americans are also expected to lose their unemployment benefits at the end of the year unless Congress passes an extension.
The employment situation has also deteriorated. Weekly jobless claims set a record high in March and have yet to fall below the previous record set during the Great Recession. Weekly jobless claims have increased in each of the past three weeks.
And the employment situation shows no hope for improvement, with nearly one in 10 companies planning layoffs in the next three months. This is in addition to more than a quarter of U.S. companies that have already let workers leave in the fourth quarter.
There is also the looming prospect of more business bankruptcies and business closures, putting more pressure on the job market. More than 420,000 small businesses have closed their doors permanently since the start of the pandemic. This represents 7.1% of all small businesses. Brookings estimates that the US economy has lost some 4 million jobs in the small business sector “which will only come back with the creation of new businesses.” On top of all this, Goldman Sachs projects even more permanent job losses to the downside as a wave of mergers, acquisitions and corporate buyouts sweeps through the economy.
This underscores the fact that despite optimism about a vaccine, nothing has fundamentally changed in the economy. And even if they cure COVID, it won’t instantly fix the economy. As Peter Schiff said, there is no vaccine for what is plaguing the economy.
The US government will almost certainly pass a massive stimulus bill to support the economy a little longer. This means more debt and more printing money from the Federal Reserve. But like Peter said, this so-called COVID cure is what is making the economy sick.
The real burden is not COVID, but all the debt the economy has racked up while the Fed tried to tackle COVID. It is the COVID cure that is far more harmful to the economy than disease. So even after the disease is gone, the cure will persist and continue to do damage because we have built up all this extra debt, because the Fed’s balance sheet is now so much bigger, because the stock market bubble is so bigger, because the real estate bubble has gained strength, because everyone has more weight than before. And of course, the US economy will be less efficient in this post-COVID world, as US businesses will still have to cover the costs of preparing for the next lockdown or virus that will arise. We already know what the playbook is. “
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