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The $600 federal unemployment benefit expired 3 months ago. But millions of Americans will lose all of their jobless aid by year-end if Congress doesn’t step in.

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It’s been three months since the $600 federal unemployment benefit lapsed on July 31, depriving millions of a critical source of government help.

Democrats are seeking to reinstate the benefit while the White House offered $400 weekly aid in its latest stimulus offer.

Around 15 million people could exhaust their unemployment benefits by the end of the year.

“If Democrats win the election, my top priority is gonna be to reinstate a benefit that will allow people to make rent, pay groceries and medicine, and provide economic relief to millions of working families,” top Democrat Sen. Ron Wyden said in an interview.

Three months ago, the $600 federal unemployment benefit enacted through the CARES Act in March expired for millions of Americans. The measure helped buoy consumer spending and pumped hundreds of billions into the economy, and provided the unemployed with extra cash to buy groceries and pay rent.

The lapse deprived jobless people of a lifeline and left them to make ends meet with state benefit checks totaling 40% of their previous wages on average, or around $330 weekly. Nearly 23 million Americans are now receiving some form of unemployment benefits.

The White House and Democratic congressional leaders are discussing a $2 trillion package that could provide extra unemployment aid among other measures. The Trump administration put forward a $400 weekly benefit in its latest offer, but Democrats are pressing to reinstate the $600 weekly amount.

Now eight months into the pandemic, many jobless people are starting to exhaust their payouts as the pandemic rages on and outdoor activities become more limited with winter nearing.

Pandemic Emergency Unemployment Compensation — a federal program providing an extra 13 weeks of benefits after state unemployment insurance runs out — will end on December 31. Government data indicates 3.7 million people are currently receiving those payments, and the number is steadily rising as people who lost their jobs early on remain out of work.

Then, Pandemic Unemployment Assistance covers around 10.3 million gig workers, freelancers, and independent contractors that are typically excluded from the regular unemployment system. It will expire at the end of December without an extension from Congress.

A senior Democratic aide close to the negotiations told Business Insider on Friday that the Congressional Budget Office conducted an analysis indicating five million people on state unemployment benefits would exhaust all their payments by the end of the year. The statistic appeared in Pelosi’s latest letter to Treasury Secretary Steven Mnuchin. The CBO did not respond to a request for comment.

Elizabeth Pancotti, an economist and policy expert at left-leaning group Employ America, told Business Insider the recent spike in virus cases could prompt renewed business closures and job losses. She argued it reinforces the case for federal unemployment benefits at a vulnerable moment for the economy.

“We’re gonna see another round of temporary and permanent layoffs,” Pancotti said. “The need for additional fiscal support for both workers and businesses is only strengthening.”

There are two unemployed people for every job opening, according to the Bureau of Labor Statistics.

President Donald Trump approved a temporary $300 weekly benefit in August, but it lasted only six weeks and the disaster relief funding for it dried up.

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Sen. Ron Wyden, ranking Democrat of the Senate Finance Committee and the legislative author of the lapsed benefit, told Business Insider reviving the measure is high on the Democratic to-do list next year.

“If Democrats win the election, my top priority is gonna be to reinstate a benefit that will allow people to make rent, pay groceries and medicine, and provide economic relief to millions of working families,” Wyden said.

The prospect for additional federal action for millions of unemployed Americans largely depends on the election results. It’s unclear whether a package will get passed in a lame-duck session after the election. House Speaker Nancy Pelosi said on Thursday she was still optimistic about the odds of relief legislation getting through Congress.

“I want a bill for two reasons. First and foremost the American people need help. They need real help,” Pelosi said. And second of all, we have plenty of work to do in a Joe Biden administration.. so we want to have as clean a slate as possible going into January.”

FINANCE

German central bank issues warning on economy

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Germany’s GDP could stagnate or even decline in the third quarter, Bundesbank has warned

The German economy has been shrinking over the past two years and will remain stagnant for the rest of the year as it continues to grapple with economic malaise, Bloomberg reported on Friday.

According to a survey conducted by the outlet, the EU’s top economy has been stalling in the three months through September, marking a deeper-than-expected decline.

Economists have already started downgrading their forecasts for this year, with some now seeing protracted stagnation or even another downturn.

“While we expect the market to see a mild recovery at the end of 2024 and in 2025, much of it will be cyclical, with downside risks remaining acute,” Martin Belchev, an analyst at FrontierView told Bloomberg.

He warned that the faltering automotive sector will further exacerbate downward pressures on growth as the top four German carmakers have seen double-digit declines.
Thousands of EU automotive jobs at risk – Bloomberg

The country’s central bank said on Thursday in its monthly report that the German economy may already be in recession. According to the Bundesbank, gross domestic product (GDP) “could stagnate or decline slightly again” in the third quarter, after a 0.1% contraction in the second quarter.

Economic sentiment in the country has suffered due to weak industrial activity, Budensbank President Joachim Nagel said on Wednesday.

“Stagnation might be more or less on the cards for full-year 2024 as well if the latest forecasts by economic research institutes are anything to go by,” he said.

German industry is struggling amid weak demand in key export markets, shortages of qualified workers, tighter monetary policy, the protracted fallout from the energy crisis, and growing competition from China, Bloomberg noted.

The Eurozone’s largest economy has been falling behind its peers over the past years, largely due to a prolonged manufacturing downturn. Germany was the only Group of Seven economy to contract in 2023.

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Thousands of EU automotive jobs at risk

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A third of the region’s major car plants are currently operating at half capacity or less, according to a report

European auto makers are facing more plant closures as they struggle to keep up with the electric vehicle (EV) transition amid slowing demand and growing competition, Bloomberg reported on Wednesday.

According to the outlet’s analysis of data from Just Auto, nearly a third of the major passenger-car plants from the five largest manufacturers – BMW, Mercedes-Benz, Stellantis, Renault and VW – were underutilized last year. The auto giants were producing fewer than half the vehicles they have the capacity to make, the figures showed.

Annual sales in Europe are reportedly around 3 million cars below pre-pandemic levels, leaving factories unfilled and putting thousands of jobs at risk.

The report pointed out that sites shutting down would add to concerns that the region is facing a protracted downturn after falling behind key competitors, the US and China.

“More carmakers are fighting for pieces of a smaller pie,” Matthias Schmidt, an independent auto analyst based near Hamburg, told Bloomberg. “Some production plants definitely will have to go,” he warned.

VW announced last week it was considering closing factories in Germany for the first time in its near nine-decade history. The automaker said it was struggling with the transition away from fossil fuels.

BMW has warned that tepid demand in China poses a further threat to sales and profits.

Volkswagen planning major cutbacks in Germany

The threat of factory closures in Europe has worsened in recent years amid skyrocketing energy prices and worker shortages that have driven up labor costs.

“Failure to turn things around would deal a blow to the region’s economy,” Bloomberg wrote, pointing out that the auto industry accounts for over 7% of the EU’s GDP and more than 13 million jobs.

Car-assembly plants often are “anchors of a community,” securing work at countless nearby businesses, from suppliers of engine parts and trucking companies to the local bakery delivering to the staff cafeteria, the report said.

Closing plants is usually “the last resort” in a region where unions and politicians have a strong hold over corporate decision-making, concluded Bloomberg.

There’s “massive consolidation pressure” for auto plants in Europe, Fabian Brandt, an industry expert for consultancy Oliver Wyman, said. “Inefficient factories will be evaluated, and there will be other kinds of plants that shut down,” he claimed.

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Global debt balloons to record highs

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It’s now $45 trillion higher than its pre-pandemic level and is expected to continue growing rapidly, a top trade body has warned

The global debt pile increased by $8.3 trillion in the first quarter of the year to a near-record high of $305 trillion amid an aggressive tightening of monetary policy by central banks, the Institute of International Finance (IIF) has revealed.

According to its Global Debt Monitor report on Wednesday, the reading is the highest since the first quarter of last year and the second-highest quarterly reading ever.

The IIF warned that the combination of such high debt levels and rising interest rates had pushed up the cost of servicing that debt, prompting concerns about leverage in the financial system.

“With financial conditions at their most restrictive levels since the 2008-09 financial crisis, a credit crunch would prompt higher default rates and result in more ‘zombie firms’ – already approaching an estimated 14% of US-listed firms,” the IIF said.

Despite concerns over a potential credit crunch following recent turmoil in the banking sectors of the United States and Switzerland, government borrowing needs to remain elevated, the finance industry body stressed.

According to the report, aging populations and rising healthcare costs continue putting strain on government balance sheets, while “heightened geopolitical tensions are also expected to drive further increases in national defense spending over the medium term,” which would potentially affect the credit profile of both governments and corporate borrowers.

“If this trend continues, it will have significant implications for international debt markets, particularly if interest rates remain higher for longer,” the IIF cautioned.

The report showed that total debt in emerging markets hit a new record high of more than $100 trillion, around 250% of GDP, up from $75 trillion in 2019. China, Mexico, Brazil, India and Türkiye were the biggest upward contributors, according to the IIF.

As for the developed markets, Japan, the US, France and the UK posted the sharpest increases over the quarter, it said.

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