July is finally here, and there’s been little movement on a second round of stimulus checks. Congress goes on recess on Friday and won’t be back until July 20, so we don’t expect any real update on a second stimulus check until then.
Of course, there is a chance the White House will have something to say about a second round of stimulus checks. President Donald Trump said last week that there would be an update on the next coronavirus stimulus package in a couple weeks. That could mean there will be news on the matter next week.
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Jobs report to inform odds of second round of stimulus checks
May's jobs report brought a surprise increase as the U.S. economy added about 2.5 million jobs during the month. Republicans took that as a sign that the economy was already in recovery mode, but the issue is likely more complicated than that.
All eyes will be on June's jobs report, which is scheduled to be released tomorrow. There could be new commentary from lawmakers about the possibility of a second round of stimulus checks after the report is released.
If the June jobs report shows that the economy added even more jobs, the odds of a second round of stimulus checks may decline. However, they won't disappear entirely. Lawmakers seem to agree that a phase four coronavirus stimulus package is needed, so they may still include a second round of checks in the package.
The problem with putting too much weight on the June jobs report is that the Small Business Association's Paycheck Protection Program will still be protecting jobs. Many small businesses placed workers back on the payroll because they received funding to do so.
However, they had to use up the funds in eight weeks, so that money will run out. At that point, they will have to depend on the economy getting back up and running. If people don't go out and start spending money, small businesses will continue to struggle. There could be a second round of layoffs in July as funds run out if consumers don't start spending money.
The good news is that lawmakers won't have to wait until August to find out how the employment situation is doing in July. The weekly unemployment report will show whether a second wave of layoffs starts to happen.
What could be in the phase four stimulus package?
If layoffs start to pick up again, it will be because consumers aren't spending money for one reason or another. Some people won't be spending because they will be out of work, while others will be holding back because they're worried about going out in public.
As lawmakers debate whether to include a second round of stimulus checks in the phase four package, they will consider whether more money will convince people to go out and spend. We already know from previous studies that the first round of coronavirus stimulus checks was spent quickly by lower-income households.
However, those with higher incomes cut their spending. That suggests that lower-income households not only need the money more but are also more likely to spend it, stimulating the economy in the process.
Beyond a second round of stimulus checks, the phase four package could also include provisions like a payroll tax cut, which would help small businesses as they try to get back up and running. Treasury Secretary Steven Mnuchin has said the next stimulus package will be focused on jobs, so that could mean benefits for business owners.
Other White House officials have said the next package may be focused on bringing manufacturing jobs and industry back to the U.S. Other possibilities include back-to-work bonuses and extra unemployment benefits.
The extra $600 in weekly unemployment benefits expires at the end of July. Republicans don't want to extend it like Democrats do, but they might be willing to consider less than $600 in extra benefits.
There could also be a tax credit for domestic travel expenses to stimulate the travel industry.