Please ensure Javascript is enabled for purposes of website accessibility

Will Lower May Unemployment Numbers Mean No Second Stimulus Check?

By Maurie Backman – Jun 6, 2020 at 7:02AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

May's jobs report was encouraging, but it also fuels the argument that follow-up stimulus checks aren't needed.

Yesterday, there was some encouraging news on the jobs front. Despite predictions that May's unemployment rate would reach a record 20%, the jobless rate actually dropped from 14.7% in April to 13.3%. Of course, double-digit unemployment is still pretty dire, even if it represents a decline. Back in February, before COVID-19 had a major U.S. presence, the unemployment rate was just 3.5%. And while we might see those numbers improve as more and more states ease restrictions and businesses are slowly but surely able to open back up, it's pretty clear that we're worlds away from a widespread economic recovery.

It's for this reason that Americans are still very much desperate for a second stimulus check. Millions have already received the initial $1,200 that went out in late April and May, and lawmakers are working to push a second relief package through.

Man and woman with worried expressions looking at documents on table.

Image source: Getty Images.

In fact, the $3 trillion HEROES Act, which calls for a follow-up stimulus payment that's even more generous than the first for some households, has already made it through a House of Representatives vote and has reached the Senate, though it likely won't be voted on until later in the month at the earliest. But Republican lawmakers have been pushing back on the HEROES Act since it was first introduced, and May's unemployment numbers coming in lower than expected could fuel the argument that additional relief need not be so generous.

What's in the HEROES Act?

The CARES Act, which was passed back in March, was the source of Americans' initial round of stimulus payments. Under the CARES Act, Americans whose income fell below a certain threshold were eligible for a one-time $1,200 payment per adult, plus an additional $500 per qualifying child under the age of 17.

The HEROES Act is similar but different. While it calls for the same $1,200 per adult, it also seeks to pay $1,200 per qualifying child for a maximum of three children per household. As such, some families could be in line for a $6,000 check if the HEROES Act is passed.

The HEROES Act also aims to provide hazard pay to essential workers, set aside dedicated funds for COVID-19 supplies and contact-tracing measures, and extend added unemployment benefits through January of 2021 (currently, the extra $600 weekly boost unemployed workers are entitled to is set to run out in July).

But while many lawmakers agree that some additional relief is needed, there's been pushback on a second round of stimulus payments in particular. Those opposed have argued that stimulus checks do not, in fact, stimulate the economy and also that the economy has improved enough since the first round of checks that a second round isn't necessary. May's more encouraging unemployment numbers could therefore effectively kill Americans' chances of receiving a follow-up stimulus, especially since some Republican leaders seem gung ho on opposing that measure.

Of course, this isn't to say that a second stimulus is automatically doomed. Anyone who looks at the bigger picture is apt to recognize that 13.3% unemployment is by no means synonymous with recovery. But whether Americans wind up with an additional $1,200 per person is yet to be determined, and there's a good chance that if a follow-up stimulus round is approved, it won't be anywhere near as generous as the HEROES Act is currently proposing.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.