On Fumes of Stimulus: California Starts Sending Out $900 Lump-Sum FEMA-Funded Unemployment Payments on Labor Day

Most states are also rolling it out. On top of other stimulus programs and housing payment deferrals via eviction bans & mortgage forbearance.

By Wolf Richter for WOLF STREET.

The stimulus party keeps rolling on. On September 7, Labor Day, the California Employment Development Department, which handles the state and federal unemployment claims for Californians, began sending out payments of $900 each to 3.1 million eligible unemployment insurance claimants. This lump-sum payment consists of three weekly $300-payments under the federal Lost Wages Assistance program, authorized by President Trump’s Executive Order, and drawing on FEMA’s Disaster Relief Fund.

This payment is in addition to the regular state or federal unemployment insurance (UI), and replaces the $600 a week in federal payments that expired at the end of July.

In its press release, the EDD said that California has received federal approval for an initial $4.5 billion in funding for a minimum of three weeks of $300-payments for “eligible claimants.” The $900-payments are sent to UI claimants that have been paid at least $100 a week on their regular UI payments received between July 26 and August 15.

There is another group of about 1.2 million claimants who can also receive the $900 lump-sum payment after they complete some final steps and “attest to their full or partial unemployment is related to the pandemic.”

The remainder of the $4.5 billion in funds might be sufficient to fund a fourth week of benefits for some of the claimants.

But the stipulation in the Executive Order that only claimants are eligible that have received at least $100 a week in benefits over the period in August renders about 192,000 of the neediest least-paid unemployment claimants in California ineligible for the federal manna, according to researchers at UCLA’s California Policy Lab.

Even with the $300 a week, total UI in California averages $575 a week, which, according to the UCLA’s report, leaves the majority of claimants receiving less than California’s poverty limit.

Thereby California becomes the latest and largest state to start sending out these additional federal unemployment funds, eventually totaling $4.5 billion.

The magnitude of UI payments has already been enormous. According to the EDD, California has already paid out $77 billion in total state and federal unemployment benefits since March 14, including $45.8 billion state UI and $28.1 billion in federal PUA (Pandemic Unemployment Assistance for the self-employed).

California is not alone. These $300-a-week payments are being rolled out across the US. But there are no guarantees that they will continue beyond three weeks; there is no further funding once the initial $44 billion in FEMA’s Disaster Relief Fund run out.

These extra $300 a week in payments form part of the enormous stimulus patchwork that has been put in place: The federal stimulus checks sent out starting in April; extra unemployment benefits under federal programs, including first the extra $600 a week and now the extra $300 a week; the PPP loans to small businesses to fund their employment even if they’re temporarily closed; and the loans and grants to large companies, such as airlines, to avoid layoffs through the end of September.

And another stimulus biggie: deferred housing costs.

Not having to make rent payments due to various eviction bans, including the new CDC eviction ban and not having to make mortgage payments due to the forbearance options allows people to spend this money on other things, such as food, a down-payment for a car, electronic gadgets, furniture, a new deck with Jacuzzi, and what not. And this has helped push up retail spending to a record in July – despite the worst unemployment crisis in a lifetime.

Stimulus falls into two categories:

Cash paid to consumers under various programs, such as stimulus checks, extra UI payments, or loans and grants to businesses that are then used to fund payroll and avoid layoffs.

Housing payment deferrals — amounts consumers don’t have to spend on housing because of eviction bans and mortgage forbearance options, though they’re just payment deferrals, not forgiveness, and add to the debt that consumers will have to deal with in the future.

The first – the stimulus and UI payments – are tracked under personal income from all sources, which in April, when the first wave of stimulus checks arrived, spiked to a record, and even in July remained far higher than any time before the Pandemic, thanks to the extra $600 a week and other support payments still in effect at the time:

The second – deferred housing payments – is a form of stimulus that is not tracked as an income item, because it is not income; it is a form of borrowing because it increases what the renter owes the landlord and what the homeowner owes the lender.

But it acts like a stimulus payment as far as retailers and service providers are concerned, where consumers end up spending this money. It shifts consumer spending from landlords and lenders to retailers and service providers. These policies create new winners and losers among businesses, and can wipe out businesses in the process. And consumers end up owing more afterwards than before.

That’s what this economy now runs on – the fumes of stimulus that could vanish at any time, and that are not sustainable, and from which any kind of exit is going to be messy.

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  152 comments for “On Fumes of Stimulus: California Starts Sending Out $900 Lump-Sum FEMA-Funded Unemployment Payments on Labor Day

  1. Josap says:

    I’m trying to guess how long the extra UI and various moratoriums need to continue before there is a vaccine, everyone gets two shots and the economy comes back to life.

    The vaccine is approved and 400M doses made.
    The time to give 200M people shots, twice.
    (Not sure how long between shots is needed.)
    And companies hire again, kids are in school, people can pay bills with paychecks.

    • Josh says:

      I believe in vaccines and get my flu shot every year but there is no way I’m going to line up and be a guinea pig for this rushed through vaccine – especially if it is fast tracked to hit before the election. I’d rather continue to shelter at home and see how it plays out. I realize I’m very fortunate that I can continue to work from home during that time. But between people like me and anti-vaccine folk, I’m not sure a vaccine will really make a dent in things in the short term.

      • Winston says:

        Plus, since there are a number of flu virus strains, the inoculations are a mix of them based upon what the now exposed for being mostly clueless CDC thinks will be the most prevalent strains. IIRC, last year the effectiveness of the vaccine given was around 40%.

      • happy_man says:

        Hey Josh, how many flu vaccine shots have to be administered to prevent one case of the flu?

        Would be a good thing to know when deciding whether to take a vaccine or not.

        • td says:

          In Canada, about 40% of the population gets the annual flu shot and an average of about 10% get the flu in a given year. However, there is residual immunity from previous shots and infections.

          In the case of Covid-19, it’s much more infectious than influenze and any existing immunity is still a matter of speculation. Since a fraction of colds are caused by other coronaviruses there might be some immunity from that.

        • happy_man says:

          hey TD, so how many flu shots must be administered in Canada to prevent one case of the flu?

          Would be a REALLY good thing to know.

      • MCH says:

        The vaccine news now is just a ploy, it seems that having done their job wrecking the economy, now our leaders want to do whatever is possible (as long as it benefits them) to get the vaccine put in a timely manner.

        For the Dumbos, it means before November, for the Jackasses, it means after November if they win, or keep on amping up mistrust of institutions if they lose. Actually, I like the options for the Jackasses better from that perspective.

        Either way, I agree with Josh, I am a believer in vaccine, but not one that is developed in a manner outside of the norm. Let me know when 100M people have taken it and after three years, there are no side effects, I am willing to partake at that point.

        • DO says:

          Quick questions, since some of you may know. What are the possible long term side effects of a vaccine? Do you know any good RCTs that have been done in this area? Or put another way, are there any studies showing that they are free of side effects. I don’t know any drug that is.

          This type of research has been done in the past for hormone replacement and other meds. Maybe I’m just not aware of it.

        • Happy1 says:


          You are asking a question that is impossible to know. There are unknowable side effects from any biological intervention. Generally speaking, side effects from vetted vaccines are extremely rare, typically neurological syndromes that are 1 in a million or less. But risks for any individual vaccine or other biological intervention cannot be known until a very large reservoir of people have been treated, and sufficient time has passed for evaluation, and that can often take years to assess.

          It is also extremely odd to me that many of the same people who are most concerned about the effects of the pandemic are also the most skeptical about the efficacy of a potential vaccine. Vaccination with a proven and safe protocol is the only way forward that doesn’t have multi-year economic and health consequences. It should be the highest of priorities. And there are far greater risks in delay than for most circumstances.

      • Tony22 says:

        Josh, How would you feel if Congress and the Supreme Court were the first to be injected with the vaccine to show the American people their good faith and belief in their actions which immunized vaccine makers from liability?

        “The PREP Act became law over significant consumer and congressional opposition. Senator Kennedy and twenty colleagues in Congress wrote a letter to the Speaker of the House and majority leader to repeal the PREP Act. In their letter, they characterized the PREP Act as “a travesty of the legislative process,” and stated that it could “be used to allow manufacturers of virtually any drug or vaccine to escape responsibility for gross negligence or even criminal acts.” They accused the law’s sponsors of creating “an empty shell of a compensation program for injured patients with none of the funding needed to make compensation a reality.” footnote 283


        • MCH says:

          I would support the idea, and let’s not leave out the executive branch. In fact, given the critical need for Frontline workers, all government employees, federal, state, local, should all be injected first. After all, these are all essential workers, it should be first in line for vaccines. On top of that, as was pointed out, those who have been disproportionately affected by C19. So, let’s vaccinate and protect those communities first.

          I would go one step further, and insist that members of Congress, the executive branch, the Supreme Court, each take every single approved vaccine. I.e. one from Moderna, one from Astra Zeneca, etc.

          After all, our essential leader should all have the best vaccines possible… to cover every contingency.

      • sunny129 says:

        AstraZeneca Shares Plunge As COVID Vaccine Study Put On Hold Due To “Adverse Reaction”

    • Fat Chewer. says:

      Yes it will. We will be serfs repaying the ineptitude of the present.

    • Pete Koziar says:

      You are right, Gunnar, but it’s not just the stimulus payments. All this debt is borrowing from our children and grandchildren.

      • JLS says:

        The Slavery system is alive and well, particularly in the so-called “civilized” world. It is to enslave future generations so that fatty and obese people can live a few hours longer, irresponsible people/behaviors are rewarded and vulture capitalists can control even more resources.

        Long live slavery!

    • NickL says:

      The economy HAS come back to life already… A vaccine will be announced sometime between mid october & Nov 1 just in time for the election. Even if a vaccine is approved how many will get it?? Who is going to pay for it???

      But all the economic numbers show that the economy is booming as much or more than pre ‘pandemic’.

      The $900 is great to put toward the new iphone, buying new clothes at Bloomingdales or Saks fifth avenue or of course yet another flat screen TV.

      • Nick says:

        @ NickL “The economy HAS come back to life already” haha enjoying your sarcasm.

        Drove sunday from my place in Torrance down to Manhattan Beach.
        A total of 20 minute drive on Torrance Ave and north on the PCH. There are “FOR LEASE” signs in almost every street.

        I should create a collage for you guys to enjoy =)

      • David G LA says:

        The 900 dollars is for the unemployed. I have two unemployed friends that will be using this money to pay rent. They don’t buy clothes, watch tv or have smart phones.

    • Stuart says:

      Keep dreaming.

    • Implicit says:

      ….and everyone lives happily ever after until the debt bombs explode before real bombs.
      The hopiun vaccine will not make problems go away. Life and vaccines don’t work that way. Crafting a universal vaccine cannot be done quickly. If they say it is ready before a couple of years, people should be weary of being test objects.
      My guess is that herd immunity will ultimately be the best cure. Also healthy diet, fun, laughter, work and exercise will be more essential for immune systems to fight the virus than a vaccine..

      • Fat Chewer. says:

        Summed up perfectly. However, it’s not going to happen. Too many special interests involved. Expect the lowest common denominator.

    • max says:

      AstraZeneca Shares Plunge As COVID Vaccine Study Put On Hold Due To “Adverse Reaction”

      Phase 3 study testing a Covid-19 vaccine being developed by AstraZeneca and the University of Oxford at dozens of sites across the U.S. has been put on hold due to a suspected serious adverse reaction in a participant in the United Kingdom.

      salvation by science ?

  2. Island teal says:

    WA State is supposedly sending out 5 weeks of payments to all eligible parties the week of 9/21. And then there is OR who may not have even applied for the funds yet. ??

    • Josap says:

      So far 45 States have been approved. Oregon was approved on Aub 28th. The States have said it takes a few weeks to reprogram the computers before they can send the money out. The total funds available from FEMA is 44B. They think it will last about 5 weeks.

      • lenert says:

        Good thing the executive order postpones all natural disasters.

        • Social Nationalist says:

          Be careful. These lump sums are very restricted. Not much stimulus and a solid reduction over CARES era levels.

          The mortgage forbearance is gone as well. Your lagging quite a bit on this post.

          October 1st is the drop dead date and is still pretty much so.

        • Wolf Richter says:

          Social Nationalist,

          There are no restrictions on the California $900 lump-sum payment. You can spend it however you want. You get the money the same way you get your UI, and you can spend your UI money however you want.

          Forbearance on GSE-backed mortgages can, upon request, be extended for up to another 180 days for a total of up to 360 days, so till next spring.

        • Yancey Ward says:


      • Trinacria says:

        I guess so much for Park Place and Boardwalk (reference to game of Monopoly ….sometimes you just got to spell it out !!!), we will be buying Baltic and Mediterranean …. :-(

  3. Apple says:

    Election is in 60 days. It’s going to be a rocky ride until then.

    • andy says:

      But smooth sailing thereafter.

      • MCH says:

        Yep, and if anyone believes that, I got a bag full of cryptos I’d like to sell them, along with a bridge in Brooklyn that can earn someone a lifetime with tolls

      • polecat says:

        Sure, straight into the rocky shoals of Depression’s maw!

        We all are gonna need tangible, practical ‘life-preservers’ at the ready, not this Fed-induced illusion of a floating crap($) table.

        • Implicit says:

          I was watching a hockey game the other night, and listening to the fake cheers and shouts. It definitely made the game more exciting because of the precision and the amount of cheer responses available to tailor the responses to the action.
          Watching the illusion of the fed action, and “real” capitalism is a lot weaker, out of time, and much more unbelievable than the hockey illusion.
          It is all an illusion!

    • Paulo says:

      Rocky after the election? It is going to be a freaking nightmare whatever the results. Upheaval and chaos seem unavoidable. Watch out!!

      This entire ballot controversy is another red herring that stokes the unrest, by both parties. Just like the medical response to Covid being forced onto individual states due to a lack of leadership and/or systemic flaws, federal elections conducted by states only adds to fractious behaviours and outcomes. My God, how difficult does an election have to be? 50 different ways that everyone bitches about? Really?

      In Canada, federal elections are run by a federal organization called Elections Canada and provincial elections are run by individual provinces. Voters can apply and vote ahead by mail, vote early for several days at polling stations, vote at a local Election Canada office, or vote on election day at the local polling station. Employers are required to allow at least 2 hours for voters to reach the poll. (This is not paid time off, they just have to be able to vote while the polls are open. For example, if my son is working a 12 hour shift there will be a nearby polling station he can vote at, or he can vote ahead by mail). Most vote at polling stations. Here’s another news flash, you have to show some kind of identification, be a Canadian citizen, prove your address (an old envelope works) and be on the voters list. You can be added to the list at the poll with proper ID. Another news flash, the ballots are the same all across the country….Paper and marked with a freaking X in a box with a supplied pencil. In our remote communities ballots are flown out to central counting centres in locked and sealed ballot boxes. I have flown hundreds of these over the years. There is no tampering. Proving who you are is not an attempt to restrict voting rights. Everyone here has a social insurance number if they have ever worked, or a provincial medical system number for our medical coverage. Either of those works as an ID. A credit card can be used to corroborate either. Homeless? Even homeless people have visited a doctor along the way and have a proven identity if they choose to have one.

      Results? Usually known before voting is even over on the West Coast, that is how fast ballots are counted, collated, and tabulated. (There are computers :-). Occasionally, there are recounts and automatic recounts if the results are close. The point of all this is that there is ONE system that is decided upon well in advance of an election. Federal ridings are established by population and/or geographical boundaries. There is no way to gerrymander a federal riding by a Province for political advantage. Hanging chads? Kidding, right? This must be some kind of joke? The idea of a political leader talking about a rigged election is incomprehensible; incomprehensible and ludicrous to an outsider looking in. This is third world stuff. Belarus. Zimbabwe.

      Regarding: running on the fumes of stimulus…..and from which any kind of exit is going to be messy.

      Until the virus is under control there is NO HOPE of a real economy. By election day there will be most likely 250K dead, and after the college opening nightmare unfolds and this ‘no mask and no flu shot for me’ nonsense perks along there could be 500K dead by the new year.

      Definition united: adjective: united…. joined together politically, for a common purpose, or by common feelings.

      It pains me to see my birthplace falling apart due to avarice and greed, self interest, and easily fixed structural governing flaws. This is not ending well, imho.


    • RoundAbout says:

      I’m out until after the election.

      Too much uncertainty with a Biden tax increase, Green New Deal and tech valuations in general.

      • Funny I would say debt ceiling obstructionists, and intelligence on foregin interference in the election (which is being deferred). There is another subset of problems if the Fed backs away from interest rate policies and balance sheet reduction issues should interest rates rise. The least suspicion on the markets part, that Fed policy was only politically expedient until Nov 3 will have repercussions.

  4. andy says:

    So in all this time in the pandemic California paid out $45 Billion in unemployment?
    Tesla valuation can change by this much in one day. For FANG it’s a rounding error. Bezos’ ex-wife got more than that in a divorce. Masa Son’s gambles this much in an afternoon.
    Clearly the Fed needs to fix widening wealth gap with more QE.

    • Andy – that’s an awesome perspective you put in there. Nicely done. It really illustrates the problems with allowing ultra-wealth. Thank you.

    • Frederick says:

      Hey, it’s 50% of whatever the net worth is If you’re lucky In NY anyway

    • lenert says:

      Inequality really takes off after the 2001 tax cut bill. Since then taxes were cut again in 03 and 17.

      • Happy1 says:

        Most would argue that Fed policy has done far far more to foster inequality by artificially elevating the value of financial instruments, which are almost entirely held by the top 10%. That factor swamps the measly 5% or so margin that tax reforms have cumulatively added to the ultra wealth.

    • NickL says:

      That is just a LUMP sum payment of $900 NOT $900 per week.. A studio apartment in San Francisco or Los Angeles is now close to $2000 a month, in NYC (outside Manhattan) it costs about the same (for a STUDIO apartment) so lets not make it like this is a huge amount of money..

      For most of the Tech bros in California $900 is what is spent on dinner and drinks out for one week

  5. MCH says:

    Of all of the government programs around, the deferred housing is the one that just rubs me the wrong way. It basically says that as a government, we’re sick of borrowing your money (via taxes), we’re just going to take it from you by forcing you to live with the consequences of the debt. Because on paper, if you’re a landlord, you are still owed that debt, but collecting is your problem.

    What was that old saying? If you owe the bank $500, it’s your problem, if you owe them $10 billion, it’s their problem. Well, basically, the government just stuck that to any landlord who had the misfortune of having irresponsible tenants.

    All this is will be just another way to socialize losses out to the public. Except, the ones who will get squeezed the most is what’s left of the middle class.


    This does remind me, what are you seeing from your unscientific poll of landlords who actually visit the site?

    • Macro Investor says:

      Landlords need to sue over this. How is it not a taking, like eminent domain?

      If the gov’t forceably turns your property into a homeless shelter, they should have to at least pay for it.

      • Flyover Rube says:


        I have rentals and have no problem being charitable right now.

        However, some figure since they can’t be evicted they’ll do whatever they want. These few problem apples may ruin the entire bunch. I’m sure managers across the country are seeing the same.

        Fortunately, I wasn’t dealing in the felon-occupied junk to start with; That is a strait free-for-all.

        • kitten lopez says:

          Corky and Basul live in the totally gentrified Lower Haight with millionaire neighbors all around now. High cotton everywhere. but across the street in the fancy penthouse flat that’s a rental, there are now constant parties fights and they have no idea who’s even living there anymore and no one can touch them, stop them, or evict them.

          here in the mission where i am, it’s QUIET.

          felon-occupied junk now has more love than the crap bought and flipped to screw the techies with dying plants. like the building next door owned by a little private REIT who doesn’t fix their heaters or other problems.

          they evicted all the long timers who took care of things but the new tech people pay too much to care about watering plants, taking lawn furniture in from the rain so it’s not black with mold like now, or picking up trash and feces outside their door.

    • andy says:

      The great thing about real estate investing is that it is tangible. You can see it and touch it, even if someone else occupies it for free.

      • Frederick says:

        You forgot the hyperinflation in carrying costs and rent receipts in depreciating dollars Oops

        • happy_man says:

          And the small landlords forgot to hire a lobbying firm and make significant political donations. oops!

      • Xabier says:

        1/ Bad tenants also tend to trash and steal -bad news all round.

        2/ Maintenance.

        3/ Maintenance.

        4/ Ma…….

        • Tony22 says:

          A landlord friend of mine had felon tenants. He hired a couple of Samoans to go talk to them. Tenants left the next day. Samoans got the second half of their payment.

          In another place of his, he moved his nephews in with the proviso that they place their tower speakers on the opposite side of the bedroom wall from the problem tenants, girls who were noisy and caused problems. They moved out at the end of the month.

        • Crazy Horse says:

          LOL Tony 22

          For our business in Honolulu we had the Samoans on full time retainer. No problemas!

          As to Sound Evictors LLC, when I was in graduate school decades ago my neighbors were a newly married couple who had all the sexual sophistication of a buck rabbit in heat. The cure I hit upon was to tape my speakers to the adjoining wall studs and leave a tape recording of them making love amplified to the maximum on endless loop over the weekend while I went skiing. They gave up on any form of sex, and every time I met the spouse in the hallway thereafter she turned beet red.

      • economicminor says:

        and you can pay the property taxes and insurance..
        even when you have no income..
        And if you don’t pay, the lender or the government can just take it from you.
        Real estate is only a great investment when values continue to climb.. It is a huge burden when they don’t.

    • Josap says:

      If you place the mortgage in forbearance, you pass the problem uphill to the servicer. At some point in all this mess, the servicer will pass it upstream to the lender.

      • Old School says:

        This fits with my theory about someone has to take the losses from the economic damage of the virus and it will get shifted to whoever isn’t politically connected.

      • MCH says:

        Yup, but unlike renters, property owners can’t skip out on the mortgage forever. Eventually the bill comes due.

        The difference is the practical disparity one has between a property owner and a renter. After a renter is evicted, how does the landlord get back the owed rent? Answer: they don’t, it’s a time value that is lost. The government is not going to be around to help your small landlords who has difficulty weathering this kind of storm.

        On forbearance, that mortgage payment isn’t going away, and neither is the interest. There is a much larger power disparity between the bank and the smaller landlords, that money is still owed. And there is a tangible asset that can be taken. The time value of that mortgage isn’t lost, just delayed.

        So, as much as the politicians like to pretend that rent moratorium and forbearance are the same thing, they aren’t. One has a much larger impact than the other, especially on the so called middle class which continues to be decimated year in and year out.

        Not to mention the fact that doing these type of things just doesn’t feel right. It starts to tear at the foundation of what the country is built on and what binds people together.

        • Ethan in NoVA says:

          With forbearance, they tack the required payments on the end. Can you pay the principal down still or do they force that into the interest that was forgiven?

          If I owned a house with a young loan, could I have said I need a year forbearance. Then saved up all the money not being paid, tossed it into principal wiping out a few years of payments on the back end? Or is there a protection mechanism against that? So jealous if it is possible.

        • MCH says:


          With forbearance, the interest is still accumulating. That year that they forebore the property owner, well, they earned interest on that. And as you’ve likely seen from the amortization schedules, the interest gets paid off first. Paying off part of the debt doesn’t matter that much, because they will make sure you clean out the interest charges before you can pay up on the actual loan amount.

      • Jackstone says:

        Yes except while the Landlord has no legal remedy with the non-paying tenant (get a court order, yeah right), the lender can take your property and will. How many banks are going to take that hit when they have the legal option that exists in the lending contract?

        Unless of course all contract law is tossed to the curb as they have done with Landlord/Tenant contract laws.

        • 91B20 1stCav (AUS) says:

          Hmmm, 2008 and again looming. Why does this sound to me like the brilliance of introducing the Compact Disc to the music market? (i.e.: use of flashing-light-on-a-stick technology to induce someone to purchase the contents of their vinyl LP library all over again???).

          May we all find a better day.

        • Implicit says:

          It will be tough when a heater pump fails to the apartment.,and the landlord can’t afford to fix it.

    • rhodium says:

      From a recent Bloomberg article, “What the New Federal Eviction Moratorium Means” ,

      “Daniel Kattan, co-founder and managing partner of PIA Residential, a private equity real estate firm based in Miami, says that corporate landlords are not likely to suffer under the moratorium, because institutional investors are better equipped to weather a short-term downturn.”

      “In the long term, this eviction moratorium will, unfortunately, create a lot of distressed properties for landlords that cannot pay their mortgages,” Kattan says. “For us, it will be an opportunity to buy more.”

      The bigger sharks are actually licking their chops to get your rental properties. They welcome your demise.

    • Allyn says:

      You just about summed it up Wolf! Frustrating!

  6. MarMar says:

    Do you have any examples of people who are not paying their mortgages but are installing a new deck with a Jacuzzi? Because if not, this seems intellectually dishonest.

    • John Taylor says:

      I saw the same thing and my immediate thought is that anyone who considers his housing situation unstable would never spend on upgrades to the property.

      My guess is that renters falling behind just start saving like crazy and perhaps paying down credit cards, seeing backpay as unaffordable and expecting a rough situation once they are evicted.

      As for homeowners, those taking advantage are probably betting they can add the missed payments to the loan balance and call it square. I still think most legitimately need the money though and would probably want to avoid losing their homes – unless their equity is way negative, but that isn’t a widespread problem at the moment.

      However, there are certainly a lot more people working from home and spending more time at home, as well as working millennials moving into their first homes. I think this has a lot more to do with the boom in home improvement and furniture.

    • Brant Lee says:

      Wolf is and has been writing about those who are taking advantage of the situation this year. Did you need your stimulus check or just lay it away in the bank? Is it better to spend the check into the economy, send it back to the government, or keep it for yourself? Which is intellectually honest?

    • Les Francis says:

      It seems in my country at least, most mortgages are up to date by owner buyers who actually live in the property.
      Tenanted property …..Hmmmmm. Land lords need to be nervous.

      It’s widely reported that younger tenants under 30 are breaking leases and moving back to mum and dads home.

      Anecdotally, my niece a millennial, who lives in an apartment block, tells me most of the other apartments are now deserted. She’s fortunate – Dad outright owns her apartment and is living with dads’ rental rate.
      What’s more of a worry for her dad is the other apartment owners have stopped paying maintenance and insurance fees.

      Wolf just did a recent survey for landlords – most seemed to be OK. That might be so in the US, not so in my country.

      I live in rental accommodation. Our rental agent has offered us a much better property than we are currently in for the same rental price.
      I’m only in rental because I sold my property in 2017 fully intending to move to warmer climes. Fortunately I sold then. If I tried to sell now, and if I could find a buyer I’d be looking at 20% less of that 2017 sale price.

    • Bob says:

      I’m aware of at least one person who is doing this type of thing. Fired himself from a non-profit leadership position in order to take advantage of the mortgage forbearance and UE benefits, and is using the money for home improvement projects. Not much downside, particularly if the missed payments are added to the loan balance.

      • lenert says:

        The media also has stories of people banking as much of this as they can because they aren’t greedy nor stupid.

    • Petunia says:

      There may be owners out there who know they will eventually have to sell and may be fixing up the property to put it on the market. If your job is gone and the house is all you have, it’s better to plan for the best outcome, which may be selling at a profit while you can.

      On the other hand, if an owner is already underwater, they know it doesn’t pay to throw good money after bad. They are more likely to pile up cash and wait for the foreclosure notice, which in this mess may take some time.

      • Clete says:

        Sad to say, Pet, I knew several people in Florida who lived free in nice houses from ’08-’15. Prices dropped so low the banks didn’t even want to foreclose, so all they did was keep the lights and water on — with renter’s insurance instead of homeowner’s.

    • Flyover Rube says:

      The duplex up the street from me is the perfect example. All-around small town scam.

      Mom owns the house. Son manages it. One tenant is a family friend and the other is family.

      They brag that both tenants got $3,000 from the state since they are “behind on rent” and the mortgage is in forbearance.

      This summer, the family side got a (cheap) hot tub and a trampoline; The friend side got a nice used ($30,000ish) pickup and a (junk yet serviceable) camper.

      I say, good for them.

  7. Bernadette Ferrer says:

    Grateful, Wolf for your poignant analysis.

    Could you share your thoughts on possible consequences in the context of Fed/State Unemployment Safety Net if every state will enforce another lockdown after the elections in view of a predicted Covid-19 Second Wave during the winter months?

    • Petunia says:

      One of the southern states reported their UI fund was likely to be exhausted in September. The article mentioned this triggers an increase in the tax the employers pay into the fund. With less employers out there, I see a bailout coming.

    • Happy1 says:

      The odds of another complete multi month lockdown are close to zero.

  8. Zantetsu says:

    Tinfoil hat theory with no evidence. Go elsewhere.

  9. Lee says:

    “Even with the $300 a week, total UI in California averages $575 a week, which, according to the UCLA’s report, leaves the majority of claimants receiving less than California’s poverty limit.”

    So that works out to about A$42,000 on a yearly basis (yeah it doesn’t last a year), but that is MORE than the yearly minimum wage for full time work in Australia.

    • Tony22 says:

      And with the savings of ten people live in a two bedroom, that means $21,000 of that, for each person, can be sent back to their home village in Central America. Free healthcare, free schools, free legal, freedom–the American way, at least in certain states and cities.

  10. Josap says:

    A worldwide fake pandemic. Those evil Governors and Mayors have really good pull with other countries.

    I can’t afford that much tinfoil.

  11. John says:

    Thanks for the clarity. Media said was never going to happen and that Dems would sue. So much noise and mis-information out there. So obvious and disrupting. Never in my life seen such discontent.

  12. Fat Chewer. says:

    So it seems that conditions are right in which to introduce MMT. It would seem so, but frankly it’s already in existence with CBs creating lots of money that is being dropped en mass on a very much suspecting or maybe even expecting public. All you proponents of helicopter drops of cash got your wish. Now what do we do about inflation? “Oh, just let it run and we’ll print more money to cover the increase! Oops, I mean we will increase taxes. There’s nothing politicians love more than increasing taxes!”

    I can’t wait to see helicopters dropping bundles of 10 trillion dollar notes. That will be a Kodak Moment. Unfortunately for my sense of spectacle, it will be posted in envelopes…if the mail arrives.

    I guess my pay for actually working will still be taxable income and no pay increase. I mean, after no pay increase above CPI (don’t get me started on CPI numbers) for over twenty years, why start now? Great motivation to work.

    Oh, and I’m supposed to be grateful to our enlightened leaders for taking a further tithe of that and giving it to my pension fund board of directors. Oops, I mean investing it wisely in naked calls for Tesla. Oops, I mean… oh, forget it.

    • Bobby Dents says:

      Nope. CB is not MMT. They do not create money. They loan it.

      • Wolf Richter says:

        Bobby Dents,

        CBs… “They do not create money. They loan it.”

        No. They create money and then they lend the created money.

        • DawnsEarlyLight says:


          Is the FEMA Disaster Relief Fund, that is supplying the $300 weekly, the same fund for hurricane relief?

        • cb says:

          @ Wolf – “No. They create money and then they lend the created money.”


          Thank you for this very important distinction and correction of ongoing disinformation.

      • Fat Chewer. says:

        Both the means of creation and of taking the money back out of circulation are irrelevant. It just reflects technical differences between jurisdictions.

    • Lisa_Hooker says:

      Taxes are not a problem. We will inflate everyone into higher and higher tax brackets. After all, progressive taxes are fairer.

  13. John Beech says:

    Seems landlords should be able to make a claim on future taxes, or am I mistaken? Not the best situation for them – but – better than being totally hosed, or put another way, receiving the pointed end of a smeared stick, right?

  14. Kurtismayfield says:

    Yep.. that increase of people dying was actually caused by government conspiracy theorist covering up Pizza gate and Epstein’s victims. If you contact all of the morgues where the deaths per day have increased they will all tell you that it is an uptick in suicides by three bullets to the head.

  15. MindWerk says:

    Pandemic or no-pandemic, it doesn’t change the fact that all this debt will have to be paid, or wait, maybe not, print print print

    • Old School says:

      Let’s think like a central bank economist. Three guys are on an island. A hunter, a carpenter and a banker with a printing press. How long until the banker determines the other two are slackards and needs to print some money to get the other two to work harder? How long before the carpenter builds a boat for two?

      • Lisa_Hooker says:

        Does the carpenter take the hunter or the banker? History seems to show that the banker will get the free ride.

  16. gorbachev says:

    The landlording business will have to change some.

    I feel like we have to become social workers in some

    respect if you can afford it.For instance.I have a longer term

    tenant that needed to go back to school for 8 months in

    order to retrain. My better half and I decided to offer her free

    rent so she could complete her studies and emerge with no debt.

    We are also recycling good old furniture to any that need it.

    I am a hoarder so she says.

    Its not enough but we in this

    time to really need to chip in.

    • andy says:

      That is very nice of you. But shame on you when you ask your tenant to start paying again; how can you be so mean.

      • Yertrippin says:

        Both landlords and tenants are making decisions that help their personal situation. Pitting them into enemy camps is the biggest joke of all. We should be focused why our system has put us into this position. Until people wake up to this, the divisions will continue, get worse, and in the end destroy us. No wonder we are so easy to control and manipulate.

        • 91B20 1stCav (AUS) says:

          Yer-you just keep hitting that nail on the head. Why don’t we focus on why our system has put us into this position, indeed.
          I believe, at core, it’s because we as a people, in forgetting/ignoring that the dynamic system we installed in 1776 (and tuned more or less effectively since) is what brought our nation to the dance, not some ‘exceptionalism’ always smiled upon by the gods. The work of a citizen is adult, demanding, a pain-in-the a**, and unpaid (in earlier times, a concept referred to and recognized as ‘duty’).

          We have been an exceedingly lucky nation over our history, i do not know for how much longer we can trust to that luck given the retreat from effective citizenship and leadership that we appear to be manifesting.

          I will stop trying to cheer us up, now.

          May we all find a better day.

        • BrianC - PDX says:


          You are spot on. For decades we have been celebrating the *individual* and *rights* to the exclusion of all else. We never seem to spend any time discussing that fact that with *rights* come *responsibilities*.

          Being an active, engaged, citizen is hard work. It also means you don’t get *your* way all the time. You have to actually talk to and work with people you may dislike. A lot.

          To Yer’s point, we didn’t get here by *the magic of markets*, we wound up in this point because of specific policy choices chosen over the that few decades. Thanks elites! (But… shame on us citizens for letting it happen.)

        • 91B20 1stCav (AUS) says:

          Brian-well-said and thank you. Other than that it never would have occurred to the Founders in say, 200 years, to have added one, i’ve always wondered why there wasn’t a ‘Bill of Responsibilities’ attending the one of Rights (talk about hard work!)…

          May we all find a better day.

        • Tom Pfotzer says:

          Bill of Responsibilities.

          Now there’s a great idea. 91B20, if you’re still on-thread, what’s the short list of responsibilities, by your lights?

          Here’s mine:

          a. Maintain accurate situational awareness
          b. Understand human nature
          c. Envision target of next step of human evolution
          d. Adapt your way toward that target
          e. Don’t be a pain in the ass to others. We’re all screwed up, and I’m the worst of the lot.

        • Lisa_Hooker says:

          @BrianC, et. al. – Sure, “elites” economic policies in the 1820-30’s got the US a civil war. Afterwards their policies resulted in abuse of the ex-slaves for a century. Their opportunism took them into WWI so they could become king of the world. The Great Depression that resulted from their policies led the US into deficit spending and WWII as the only alternative bail-out. (The German anti-semitic insanity wasn’t a factor until after the war.) After WWII the elites embraced the MIC and the Cold War which wasn’t so cold in Vietnam. And on and on. Now we have effective More Money Today theory and practice. I don’t care much for your “elites” and their consideration of the less fortunate.

        • 91B20 1stCav (AUS) says:

          TomP: the speed and frequency of Wolf’s excellent posts form a stream that, in my dotage,irrelevancy, and necessary day-to-day labors, i don’t paddle back up as often as i would like to revisit rewarding conversations. Engin-ear in a later post framed this issue as people conflating ‘rights’ with ‘entitlements’-a viewpoint that resonates vis our palaver, here, but raises serious semantic questions over the nature of those words (‘straight talk’, in uncivil English, anyway, can be a very fluid term).

          Apropos of what i would place in a ‘Bill of Responsibilities’ (and you’ve made a great start, here), (other than ‘understand and truly respect ‘TANSTAAFL’ (‘there ain’t no such thing as a free lunch’) in EVERYTHING, human or natural)), i think i need a serious reread of Hofer’s “The True Believer” and some equally serious (and painful) think-time before adding to the stew and its subsequent distillation. As i intimated, it would be long, hard work to achieve something adequately functional in this case, even as we agree that it would be beneficial to the nation long-term…

          Lisa-i think Brian implied the ‘sarc’ button in his comment about ‘elites’ but, as too-often in this life, i may just be missing something.

          Y’all stay well, safe and…

          find a better day.

  17. Gene says:

    I expect that Biden/Harris will win the election and when they take office there will be greatly expanded financial aid to the states. Washington will backstop the states. We basically have Modern Monetary Theory now. With the change in administration, the separation between the federal and state levels of government will be greatly eroded. If there’s any reluctance on the part of foreign countries to buy U.S. debt instruments, then the Federal Reserve will fill the gap.
    I recall Arthur Okun, the Chairman of the Council of Economic Advisors, writing a book in 1970 in which he laid out how the economy could be fined tuned to insure prosperity for all. The economists at that time had faith in Keynes. Gradually, starting with the failure to raise taxes during the Vietnam War, losing our biggest creditor status, waging “optional” wars, etc., things got more and more off track. The response to COVID-19 was the straw that broke the camel’s back.

    • Social Nationalist says:

      I doubt it. Vaccinations will begin next year and political/mechanized polity reject your point. MMT, no.

      Harris is irrelevant.

    • BrianC - PDX says:

      Why would you expect a Biden/Harris administration to active address any of the current problems?

      I would expect a Biden/Harris Admin to:
      – Apologize that the cupboard is bare because of “Orange Man”, therefore initiating a reign of permanent “Austerity”
      – Leading to a defenestration of Social Security
      – Transformation of Medicare/Medicaid into a voucher program so folks can buy individual polices on a new and improved Obamacare web site
      – Insurance/Hospital Protection Act – Making medical debt not able to be discharged in bankruptcy, *and* requiring pay back by your survivors after your death
      – Job Recovery Program – Lowering minimum wage to a couple of dollars an hour to bring jobs back from Bangladesh
      – Plus some total info awareness domestic terror stuff to keep the riff raff in line

      I wish I could throw a /sarc on that, but right now with the way things are going, nothing will surprise me in the next couple of years…

      • Happy1 says:

        This is the complete opposite of Dem priorities and is preposterous. They will bail out the states and massively expand entitlements, that is their history and stated intention.

  18. wkevinw says:

    It’s looking more like there will be a combination of money-printing/inflation and higher taxes. The taxes will cause states with more responsible budgeting to subsidize those with irresponsible budgeting.

    It’s hard to tell when, but at some point the bond market basically always starts to disgorge/sell large numbers of bonds, causing the bond-issuing entities to take action to slow down debt creation.

    Selling begets selling, so a new cycle (of some kind) gets started when this happens.

    • David Hall says:

      Nonessential businesses wanting nothing but lower taxes needed big government bailouts to remain solvent. They complained it was not fair they were forced to pay taxes to help others. When the pandemic hit they wanted others to pay taxes to support themselves. Where they pay no taxes the roads are full of potholes and it is a bumpy ride.

      • Mr. House says:

        And bailouts will continue to be needed until debt is allowed to be liquidated. Which is the same thing as saying that a revolution would need to happen, because in our society debt=power.

  19. Anton says:

    There is one other thing I would add to what I wrote in email Wolf. If the rent that is not being paid now does NOT have to be repaid, then this would amount to a shadow tax on landlords. Not being able to collect rent is very similar to a government taking and can be considered a tax on landlords

    • Beardawg says:


      It amounts to more than that. If a government decrees rent does not have to be paid, then government is “taking” land from landowners. This is illegal unless the landowners are paid for that land.

      There have been similar discussions in similar WS articles.

      • For all the talk about how landlords are getting screwed, very few are taking advantage of the easy solution: you can sell now (in most US cities) into a strong and rising market.

        • Bobby Dents says:

          Not anymore. Strong they are not. Loan originations are falling.

        • Bobby Dents, yeah, sellers have raised their prices 5-30%. They’re afraid of selling too low. I admit, I’m one of the fools who panic-sold before the price spike higher.

          I guess you haven’t seen Black Knight’s press release from today?

          “Q2 2020 saw the largest quarterly origination volume on record with nearly $1.1 trillion in first lien mortgages originated in the quarter”

          Of course, loan originations are falling from this insane spike higher. But they’re still high.

        • Clete says:

          @Orthodox: Prices on rental housing (for purchase) are not rising as much as regular residences — because who knows when you’ll be able to collect rent again?

      • Shiloh1 says:

        Any landlords getting relief on local government property taxes? I have not heard of any.

      • You mean like the way they confiscated family farms for taxes in the Midwest during the depression, and sold them at auction, to corporate agribusiness interests?

      • Fat Chewer. says:

        You never really owned the land. You have a freehold, but the government owns all the land. Look it up. Its under Magna Carta; legal and economic effects of.

  20. Henry Ford says:

    Dear Dumb-Ass Taxpayer,

    I am really enjoying my Jacuzzi. Thank you. Please keep working for me, and don’t move away too quickly.

    Hands Out, Don’t Stop

    • Clete says:

      +1 for your last line. Needs to be a t-shirt handed out at the “peaceful protests.”

  21. MonkeyBusiness says:

    No Habla English

    What do you mean it’s a deferral?

    • Wolf Richter says:

      “deferral” means you have to pay later. Those rent payments and mortgage payments are not forgiven.

      The landlord cannot evict the tenant for nonpayment but has all legal rights, including going to court, to collect the debt. Landlords can get a judgment for past-due rents that will allow them to garnish wages and bank accounts, and the like (but cannot evict).

      The mortgage payments not made under forbearance are added to the remaining mortgage.

      • MonkeyBusiness says:

        My apologies Wolf, I was trying to make a joke i.e. renters pretending not to understand English when it comes to “deferral”.

      • Tony22 says:

        Good luck collecting from people south of the border.
        Heard there’s a problem with vehicles bought on time going south as well.

        As a former car dealer Wolf, does lack of a clear paid off title prevent registration of vehicles in say, Mexico?

        • 91B20 1stCav (AUS) says:

          Tony-‘la mordida’ is an oft-used document solution…(and probably less than the balance owed…), or, lacking that, confiscation and ? as an alternative…,

          may we all find a better day.

  22. lenert says:

    Pew is reporting the share of young adults living with parents is now at its highest level since 1900 surpassing that of the great depression.

    • Wolf Richter says:

      Makes sense. At least part of the reason is that many campuses are still closed or operate on reduced scale. Distance learning is big. So many students, including grad students, stay at home. There are other reasons, such as recent graduates from high school and college having trouble finding a job in this economy.

      • Clete says:

        And Heaven help you if you’re a campus slumlord.

      • BuySome says:

        Can’t find gainful employment in cashing government checks for free money? Seems like they staked all that edjumacation time on the wrong subjects! Cue the Village People video singing Join the Navy!!! Worthless degrees…what will they think of next for printing on toilet paper…oh yeah, dollars.

        • Lisa_Hooker says:

          Interesting thought. Like the post office, you go to the bank and ask for a roll of twenties. Will we be able to get “forever” twenties guaranteed to maintain purchasing power?

      • MCH says:

        Random thought, not sure if I’d want to hire a chemist, or a biologist, or an engineer who got through his PhD by learning at a distance. Nyuk nyuk nyuk.

  23. andy says:

    GM just spent $2 Billion to buy-in into electric truck ‘maker’ Nikola (which had $95K in revenue; I guess they sold one truck, maybe).

    Fast forward 6 months >> GM ask $20 Billion in taxpayers bailout.

    • Turtle says:

      It would be refreshing to see the government let automakers and airlines fail for once. Innovation will fill the space.

  24. roddy6667 says:

    In ancient Rome, Bread and Circuses kept the Great Unwashed placated. However, they didn’t have mortgages, car payments, bass boat and RV payments, student loans, credit card debt, or Internet and mobile phone bills.

    Bread and Circuses doesn’t work any more.

    • Tony22 says:

      UBI in the form of EBT cards has been working quite well for a long time now.

  25. Some form of UBI is likely. The landlord is another fragmented, locally run, private business, which Wall St has been synergizing. Any form of rent subsidy is going to be a corporate subsidy. Beyond WeWork, they build huge rental companies, squeeze profits, and treat the landlords the way Uber treats cab drivers.

  26. DR DOOM says:

    The dollar got stronger even with this new sugar. I say print the hell out the dollar and pass it out untill the suckers of the world paying for it catch on. Give em’ .5% or less for our debt and shovel it down their gullets. Hey, maybe Nato and the Spooks can drum up an operation using this Nalvany meme that’s rolling around in the MSM. Maybe launch a blue dress invasion of a hapless European country. Money Printer going Brrrrrrrrrrrrrrrrr……..Got them new high quality German bearings for smooth care free operation. This is how you run an empire.

  27. xtron says:

    hey, unemployed californians….
    fire departments thru out the state are hiring temporary help…good pay and all the over time you want

  28. HR01 says:



    Since all of these stimulus measures went into effect, surely GDP reports are now massively overstating economic activity. After all, any mortgage or rental payment that has been classified as being in forbearance allows the debt to be classified as ‘in good standing’ even though no money is changing hands. So these non-payments likely continue to be counted as part of GDP.

    When forbearance expires (likely next April as you mention above) the bill comes due. Extend and pretend crashes and burns spectacularly. GDP reports for Q2, Q3 and Q4 of 2020 as well as Q1 of 2021 will have to be revised lower.

    However, long before April this fictionalized economy runs well off the rails. Brutal layoffs here in Q3 and Q4 and Congress plans on sitting it out until after the election.

    • Wolf Richter says:


      Yes, this is going to be an interesting issue, and I don’t know the answer.

      Normally, rent and mortgage interest, mortgage fees, etc. (but not principal payments) are part of “services” in “consumer spending” in GDP. So when rents don’t get paid and mortgage interest doesn’t get paid, this would be picked up by the consumer spending accounts in the GDP calculations, and would lower them. So in effect, not paying rent would be a negative for GDP on this side, as you point out.

      But will these non-payments be “accrued” and show as paid, even though they haven’t been paid, because they will/should be paid in the future? I think we’re going to see some special Pandemic accounting. We’ve already seen some of it. I will try to dig into this when we get the Q3 GDP report.

      • Petunia says:

        In accounting, income that has been accrued is considered earned, expenses that have been accrued are considered debt/payable. Whether the money actually gets paid is irrelevant. This is under the accrual method of accounting which most large companies use.

        The other method is cash accounting and where money coming in and going out is actually what matters. Most mom and pop businesses usually use cash accounting.

  29. sunny129 says:

    Vaccines are NOT the panacea!

    AstraZeneca Shares Plunge As COVID Vaccine Study Put On Hold Due To “Adverse Reaction”

  30. Baypoor says:

    Seriously, a part of me wants to not pay my rent, save up more for my down payment (is there finally going to be a decent house available in the bay area/excellent school district for around 2 million?) , and then figure out a deal with the landlord at the end. I suspect that I would come out 20-30 grand ahead (we rent a large house on the Peninsula so the rent is $$). We hope to buy in a year but who knows what’s gonna happen in these crazy times, so don’t want to antagonize nice landlord.

    • Fat Chewer. says:

      I think you should do that. Yes the landlord will hate it, but this crazy situation is not your fault either. Don’t believe what they say; they can usually afford it. They have had a good run for a long time. In Australia we say “their chickens have come home to roost”. Subsidies and special treatment can’t last forever. It’s time for them to give something back.

  31. Turtle says:

    What will it take for the government to stop?

    It seems to me that every time they prop one person or business up, they are at the same time holding another back.

Comments are closed.