The holidays aren’t looking so happy this year.
- Christmas is going to be miserable for many Americans this year.
- While higher-income Americans have seen jobs return and incomes grow, lower-income Americans are either still struggling or doing worse — the so-called “K-shaped recovery.”
- Relief in the form of a $600 stimulus check is on its way, but months of legislative gridlock mean even that help won’t arrive until after the holiday.
Santa’s in a plexiglass box, there’s an ever-worsening global pandemic, and just $600 is on its way.
Merry Christmas, America.
In a year like no other, even Christmas isn’t immune to the devastating effects of the pandemic. Dr. Anthony Fauci will be celebrating on Zoom, and he’s urging fellow Americans to do the same. Tragically, many families will experience their first holiday season without a loved one.
But the story of Christmas will also mirror America’s long year of pandemic: the split between the rich and the poor.
The “K-shaped recovery” has been the economic story of 2020. Higher-income Americans — especially those in industries like tech and software — have seen jobs return and their incomes grow, with halls decked accordingly. The opposite is true for everyone else.
Those at the top have been able to save more money, creating increasingly larger cushions. Throughout the pandemic, higher-income people have consistently been spending less than lower-income Americans. With the experience economy shut down, they’ve been stripped of their favorite splurges like traveling and entertainment. Any of their spending has instead been directed towards solitary leisure activities, like golfing, should the weather allow.
And then there’s the bottom of the K: nearly 8 million Americans fell below the poverty line from June to November, according to a report from researchers at the University of Chicago and University of Notre Dame.
A September study from the Pew Research Center found that 46% of lower-income adults have had trouble paying their bills since the pandemic’s onset. There’s also important nuance to that figure: Black and Hispanic adults, women, and those without a college degree were among the groups most likely to have had trouble paying their bills, mortgages, and medical costs.
The latest data from the Bureau of Labor Statistics shows that over 10 million Americans were still unemployed as of November. Lower-paying sectors have seen a slower recovery.
Young adults have been particularly slammed by the coronavirus recession. Gen Z has been hit hardest in terms of unemployment, while millennials were most likely to get a pandemic pay cut.
A ‘too little, too late’ stimulus package
Relief is on its way in the form of a new $900 billion coronavirus stimulus package, nearly six months after the last one expired. But the package, which reportedly contains $600 in stimulus checks and an extra $300 week in unemployment benefits, is half as generous as the last stimulus package (that one provided for $1,200 stimulus checks and $600 a week in unemployment benefits). What’s more, the new package’s enhanced unemployment benefits are shorter in duration, only set to last for 10 weeks versus 16 weeks under the CARES Act.
On top of that, Treasury Secretary Steve Mnuchin said Monday that stimulus payments might begin reaching Americans’ bank accounts next week. It’s a speedy timeline, but one that comes a little too late. Months of legislative gridlock meant the package wasn’t passed in time for Americans to receive checks by Christmas.
Even so, the $600 check wouldn’t have covered what the average American plans to spend on gifts and other holiday expenses in 2020 — about $998, per the National Retail Federation’s October estimates. That’s $50 less than what they spent last year, a dip likely due to the pandemic, but still 20% more than what Americans were spending a decade ago.
In terms of Christmas fortunes, it seems like the Grinch is no match for a pandemic. But for the rich, it might be a great holiday.
