Fiscal Aid Fading: Where Is America Feeling Weakness Right Now?

Fiscal aid talks have subsided--who and what will feel the brunt of lapsed aid?

With no stimulus bill passed, U.S. Congressional lawmakers have wrapped negotiations, ending in a stalemate. In his attempt to take executive action in light of Congress’ failure to come to a resolution, this past Saturday, President Trump issued orders to extend the federal eviction moratorium, payroll tax suspension, student loan relief, and $400 a week in enhanced unemployment benefits.

It’s not clear whether this move will be effective or is even legal due to the separation of powers, rendering Trumps’ orders potentially unconstitutional. However, the executive orders themselves are not all-encompassing of the bipartisan issues that were laid out in negotiations such as small business aid, stimulus checks to Americans, aid for schools, and so on.

Putting that aside, let’s consider where some weakness is already showing and who stands to lose in these circumstances.

As we know, there is great stress in rentals for both tenants and landlords. According to the National Multifamily Housing Council (NMHC), 79.3% of US households had made either full or partial rent payments as of August 6th. Property managers have also noted that the proportion of renters relying on credit cards to make payments was increasing, a signal of more financial pain.

NMHC also said that luxury or high-end properties had been impacted more negatively as the enhanced FPUC benefits probably were not enough to cover the higher expense. Of course, renters, who are also low-income and especially vulnerable, and landlords, who preside over their residences, will experience great distress as well.

According to RealPage, reports of sharp declines in rent remittance came from more metropolitan areas. Through August 6th in Las Vegas, rental payments dropped to 76.8%, a 7.7% drop from the year prior. Los Angeles fell to 82.9%, a 7.5% drop, and New York and the surrounding region fell to 64.5%.

Generationally speaking, millennials would be more at risk of eviction from a rental property considering how the homeownership rate of this demographic is much lower than those of older generations. They also are experiencing higher rates of unemployment due to the pandemic—according to the Federal Reserve Bank of St. Louis, almost 5 million millennials have lost their jobs.

Real Vision Blog - Chart: Millennial Unemployment 2020
Source: The Wall Street Journal

Millennials never had fully recouped what was lost during the Great Financial Crisis, and so their position was much weaker going into this recession. The percentage of millennials not being able to cover a $400 emergency was higher than older generations due to lack of savings.  

Real Vision Blog - Chart: Households unprepared for emergencies
Source: The Wall Street Journal

 The average loss of their earnings from 2007-2017 is greater than older generations. 

Real Vision Blog - Chart: Average loss of earnings 2007-2017
Source: The Wall Street Journal

And the employment rate for millennials has lagged behind older generations ever since 2008. 

Real Vision Blog - Chart: Generational Employment Rate
Source: The Wall Street Journal

The setback from this recession will be felt most strongly by most millennials, who were already in a disadvantaged place, and older Gen-Zers as well.