Democrats and many economists, however, have said policy makers must tackle the more pressing problem—controlling the virus and supporting American households and businesses—and worry about deficits later, especially when the cost to borrow is so low. The yield on the benchmark 10-year Treasury note was around 0.622% late Monday, down from more than 2% a year ago.
The CBO estimated last week that the jobless rate will end the year at 10.5%, compared with a 50-year low of about 3.5 percent before the recession. While the economy is expected to grow in the second half this year, output in the fourth quarter of 2020 will be 5.9% lower than a year earlier, the agency said.
The economy showed signs of reviving in May and June as parts of the country reopened. The number of Americans receiving unemployment benefits fell by nearly 700,000 to 18.1 million for the week ended June 27, the lowest reading since the week ended April 18. Employers added a combined 7.5 million jobs in May and June after shedding 21 million jobs in March and April.
In June, spending soared to $1.1 trillion, compared with $342 billion in the same period a year earlier, the Treasury said Monday. Nearly half of that spending went to emergency small-business loans provided under the Paycheck Protection Program, aimed at helping small firms meet payroll and keep workers attached to their jobs.
Outlays for jobless benefits climbed from roughly $2 billion in June 2019 to $116 billion last month, about half of which was due to the extra $600 in weekly benefits that Congress authorized as part of the so-called Cares Act. Those enhanced payments are set to expire at the end of this month unless Congress chooses to extend them.
Meanwhile, federal revenue sank 28% to $241 billion, due in part to the administration’s decision to delay tax payment deadlines. The government typically receives an influx of revenue in June when corporations and individuals make quarterly estimated tax payments. Senior Treasury officials said Monday they expect to receive a large share of that revenue in July, though declining wages and reduced economic activity have also constrained federal receipts.
For the first nine months of the fiscal year, the budget gap totaled $2.7 trillion, the Treasury said, more than triple the deficit during the same period a year earlier. Receipts fell 13% from October through June compared with a year earlier, and spending rose 49%.