Fatter unemployment check are hurting the COVID-19 economic recovery: Goldman

Much larger unemployment checks as part of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act may be hindering the U.S. economic recovery from the worst of the COVID-19 pandemic, suggests researchers at Goldman Sachs.

“While the $600/week benefit top-up has been instrumental in stabilizing U.S. household income so far, it has also pushed the replacement ratio — benefits as a share of prior income — above 100% for many low-paid workers. If the measure is extended beyond its current July 31 end date, this will reduce the incentive to seek work as the economy opens up,” writes Goldman Sachs Chief economist Jan Hatzius in a new note to clients.

Under the CARES Act, those unemployed are allowed to claim an extra $600 a week in benefits. The “top-up” as it’s called on Wall Street has meaningfully supported households during the pandemic — consider that the average unemployment

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Powell to face ‘status check’ on Fed’s emergency actions

The Federal Reserve is scheduled to announce its latest policy decision on Wednesday. But with rates already at near-zero, attention will likely shift to the central bank’s nine liquidity facilities and its ballooning balance sheet.

“We do not expect any major policy changes at the meeting,” Goldman Sachs wrote April 23, adding that a rate hike won’t be on the table until at least 2023.

Chairman Jerome Powell’s press conference on Wednesday afternoon could provide guidance on where it goes with its $6.6 trillion balance sheet, which grew by over $2.3 trillion since the first week of March.

For comparison, the balance sheet peaked at about $4.5 trillion following the 2008 financial crisis.

The Fed has messaged that its current purchases of Treasuries and agency mortgage-backed securities are “open-ended” – effectively a cap-less quantitative easing program.

Deutsche Bank wrote April 23 that the Wednesday decision will also serve as a

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How the coronavirus stimulus check could impact your 2020 taxes

Millions of Americans who are eligible for a coronavirus stimulus payment started seeing the money deposited to their bank accounts this week. The Department of Treasury announced the majority of people would receive these funds within the next two weeks. The IRS will use tax filings for 2019 or 2018 to determine who gets a payment and how much. But what happens to Americans who do not traditionally file their taxes?

The Treasury Department worked with the Internal Revenue Service (IRS) to create a new tool, which allows people who normally don’t file their taxes to get a check. The tool provides a free option for people, including those with too little income, to file their taxes to receive stimulus payments.

“This tool works for all non-fillers,” Richard Winchester, law professor at Seton Hall University School of Law told Yahoo Finance. “That would include people receiving Social Security, retirement

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Will you get a ‘coronavirus check’? $2 trillion stimulus package explained

Congress has passed a $2.2 trillion coronavirus stimulus package to help Americans affected by the coronavirus pandemic. The bill includes direct cash assistance, additional unemployment funds, and tax credits to employers. Called the CARES Act, the 880-page long legislation represented a rare moment of bipartisanship; it passed unanimously in the Senate. 

Stimulus checks

The most well-known piece of the bill — stimulus checks — is available only to eligible Americans, based on tax returns. If you have already filed your 2019 tax returns, the Internal Revenue Service (IRS) will utilize those. If you haven’t, any coronavirus assistance will be based on your 2018 returns.

If you didn’t file either year because your taxable income is low enough not to necessitate a filing, don’t worry. The IRS will still be able to calculate your benefit; what’s more, Americans on the low end of the income scale will receive

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The one reason you might want to check your 401(k)

This is not the best time to check on your 401(k) account. The global coronavirus crisis has upended businesses and despite some drastic government action, the stock market is in shambles. After you reset your password to restore access, you will see nothing but very bad news. 

The S&P 500 index (^GSPC) is down a coronary-inducing 31% off its February highs. That means if you’re young and your 401(k) mostly has stocks (let’s say you own S&P 500 index funds), you’re probably down around 30%. 

As you get older, financial advisers typically advise transitioning out of more volatile and risky assets like stocks and into the safety of bonds. For a retirement account like an IRA or a 401(k), younger people are very stock-heavy — sometimes 100% invested in stocks, because they have a long way to go until they’ll need the money and the market will have enough time

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