Dividends and US labor market recovery stalls amid dwindling fiscal stimulus

If you think back to March when governments around the world closed the economy as much as possible to try to prevent the spread of COVID, the governments knew that shutting down the economy by asking people not to gather in groups was going to harm people’s livelihoods. Governments around the world open their wallets at the Central Banks and sent money to people, in the case of the US it was an extra $600 a week. At some point, governments were hoping that the virus would become a smaller issue and life would continue. We know COVID is not going away quickly, but governments are not positive what they should do. The President offered $300 and an extra $100 from the state if the state opted in, but most states did not because under the law they are not suppose to run deficits and by people not meeting in groups, taxes are way down, spending is up and deficits will be had, unless Washington sends money.

President Trump has campaigned saying, well there are guidelines for the people, but as a politician you should come to my rally, even though most of the states do not allow for conventions or gathering of people. It is odd, but the real issue is what to do with the people whose jobs are not coming back until people can gather – tourism, hospitality, conventions, travel, etc. In an article by Lucia Mutikani of Reuters, in mid September, at mid August more than 30 million people were on unemployment benefits. In addition, a number of companies such as the airlines were receiving money to keep people on the payroll are letting them go because they not longer receive the money and fewer people are flying.

For state unemployment benefits fell to a seasonally adjusted 860,000 people, economists were expecting 850,000.

Some of the claims were dropping because people were beginning to exhaust their benefits which are limited to 26 weeks in most states.

Meanwhile in Washington, the President is campaigning as the economy has opened up and all is good. There is an election going on, so we do not know if policies will be changed.

Linking to dividend paying stocks, when governments gave money to people to help them get through the shutdowns it was a good thing to do. While people lost their jobs, spending was able to continue although many had extra weeks for adjustments. As an individual, when you buy dividend paying stocks the money you earn can be used to buy more stocks or pay bills or other concerns you have. The dividends allow you to have some options, hopefully over time the options increase as more money comes in. Generally there are a few times when systems can be changed, perhaps this is one of them.

There are more questions than answers, till the next time – to raising questions.

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