Keep an eye out on things at the end of December


With no fresh stimulus in sight, the US economy continues to hang in there over the past few weeks but with more pain set to come, how will that hamper the actual (not talking about equities here) nature of the economic recovery process?

There are two key unemployment programs still running in the US currently and that is the Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC).

However, they are both scheduled to expire at the end of December with the former ending on 31 December and the latter ending on 26 December.

What is the impact of all of this?

In some states, the PUA has already lapsed some time in July but the more pressing one will be the end of the PEUC instead. According to this report by TCF, an estimated 12 million jobless workers will lose unemployment benefits come the year-end.

That will add to the 4.4 million jobless workers who have already exhausted the benefits above before the year-end cutoff, and all of these workers will not be receiving much, if any, aid whatsoever as we move into the new year.

Former US Treasury economist, Ernie Tedeschi, argues that all of this will be tough to be seen in economic data and there's a chance that most data will still "come in north of zero" despite the absence of a fiscal package.

However, the situation on the ground is going to be brutal:

America going into the winter months without more economic support is like a young runner with a serious injury competing in a rugged 10K after a week of good therapy because she can't feel the pain. *Maybe* she'll be fine. But the risks are alarming. —@ernietedeschi

As for the stock market, well we have learned over the past few months that the only thing that matters is the Fed. We already survived one fiscal cliff at the end of July, so who is to say that we won't once again at the end of December?

That said, just be warned. The risks are pretty much laid out for all to see.