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Despite falling unemployment, America’s poverty rate just reached the highest level since the pandemic began

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As of last month, the U.S. poverty rate has been on an upward trajectory.

Between February and March, the rate of poverty in the U.S. increased by 0.5 percentage points to 11.7%, resulting in the highest level since the onset of the coronavirus pandemic, though the change wasn’t statistically significant. That’s second only to 11.6% recorded in November 2020. These estimates were taken before the rollout of the Biden administration’s American Rescue Plan.

Since spring of 2020, real-time poverty data in the U.S. has been tracked every month by economists Bruce Meyer, from the University of Chicago Harris School of Public Policy, and James Sullivan of the University of Notre Dame’s Department of Economics and the Wilson Sheehan Lab for Economic Opportunities.

More than 100 million claims for unemployment insurance have been filed over the last year, the economists wrote with co-author Jeehoon Han of Zhejiang University in China, describing the government’s three stimulus packages.

“While new UI claims fell sharply from April through July of last year, weekly claims have remained high since then at more than 1 million claims each week, about 5 times the pre-pandemic rate,” they added.


‘Many government benefits expired, unemployment insurance benefits are typically only about half of pre-job loss earnings, and nearly 5 million people have left the labor force since the start of the pandemic and, therefore, are not counted as unemployed.’

Those who experienced the sharpest rise in poverty included children, white people, women, those with low education, and those in nearly half of U.S. states that have more restrictive unemployment-insurance payment policies. Last month marked the first time that poverty has been so acute for children, non-minorities and women, the report added.

Under the American Rescue Plan, individuals making less than $75,000 a year in adjusted gross income received $1,400. The payments decreased for individuals earning $75,000 and up — and phased out completely for those making $80,000 or more and couples making $160,000 or more in adjusted gross income. It was the third such relief package over the last year.

Unemployment fell to 6% in March 2021 from a seasonally adjusted 14.8% in April 2020, as poverty rose. Initial jobless claims filed traditionally through the states fell to a seasonally adjusted 576,000 from 769,000 in the prior week, the government said last week, marking the largest decline since August. Yet 16.9 million people are still reportedly collecting benefits.

“This disconnect between poverty and unemployment is not surprising given that many government benefits expired, unemployment insurance benefits are typically only about half of pre-job loss earnings, and nearly 5 million people have left the labor force since the start of the pandemic and, therefore, are not counted as unemployed,” the economists added.

In the last week of March, 20 million Americans getting by primarily due to the generosity of friends and family were more likely to be suffering from food insecurity, according to a separate analysis by Claire Zippel, a research analyst at the Center on Budget and Policy Priorities, a think tank focused on the impact of budget and tax issues on inequality and poverty.

Also see: George Floyds and Christian Coopers are all around you — they are your neighbor, teacher, co-worker and friend



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My friends raised $15,000 on GoFundMe while I was comatose after an accident. But I inherited $1 million, and my insurance covered the costs

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Dear Quentin,

Last month, I was in a terrible accident. Most of the expenses are covered by insurance and a couple months before that, I received almost $1 million from a relative. I had not told anyone about my good fortune nor made any purchases (yet!) that would indicate a change of status. While I was in the ICU and comatose, a friend started a GoFundMe for me.

By the time I found out about it, it was up to $15,000 and over 300 friends, even strangers, had contributed. Several friends gave hundreds of dollars. I asked several more knowledgeable friends about somehow canceling it, and they discouraged that action. Too late! Now not only am I racked with guilt, but I am afraid to make improvements on my house.

I make donations to every GoFundMe that I come across, and I made donations to my favorite causes, but meanwhile there is THAT money. I did one “status update” on Facebook, thanking everyone and mentioning my ego “accepting” help. I am afraid to even look at the total, and have not gone to the site. To make it worse, before this, I was lower-middle-class, and so are many of the friends who gave money.

I am sick at the thought of their sacrifice. I will buy them lunch and drinks when I am on my feet, but what else can I do? I can’t even enjoy the money I received before the accident for fear of upsetting someone.

Ask Before Funding Me

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

Dear Funding,

You are still recovering from your accident, and no doubt traumatized by that ordeal. The last thing you need is this hanging over your head. It may have become a proxy for all of the emotional turmoil you endured during and after your accident.

That said, I suggest you rip off the Band-Aid and take action. Tell your friends that you appreciate what they did for you, but your insurance covered most of the costs, and you have an inheritance and more money than you need to get through this.

GoFundMe can also return the money to your friends. You can post another status update to say the gesture meant more than any monetary value, but the insurance has come through, and you have been very fortunate. GoFundMe makes it easy to refund donors.

And, yes, I take your point. Setting up a GoFundMe without the knowledge or permission of a friend or neighbor or coworker is a risky prospect, and should be avoided in most, if not all, instances. In this case, you were in the ICU and sedated, so they can be forgiven for that.

Godspeed with the rest of your recovery.

The Moneyist: My friend set up a GoFundMe to pay for her sick pet, instead of getting a refund on our vacation. I canceled the trip. Who’s right?

Hello there, MarketWatchers. Check out the Moneyist private Facebook
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 group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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My friend of 30 years owes me $20,000 after living in my apartment rent-free. She texted on my birthday to say she misses our friendship

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Dear Quentin,

One of my oldest friends of 30 years rented an apartment from me for 8 years. She stopped paying rent during the last year when she started her own business. She kept saying she would pay me back, but by the time she moved out 3 years ago, she owed me more $20,000 in back rent and stopped taking my calls when I tried to collect it.

Out of the blue she texted me on my birthday last week, and said she missed me, and would like to be friends again. However, her texts mentioned nothing about paying me back. I have already made peace with the lost money, and lost friendship, but I’ll bring up the back rent if we do speak again, which will probably be the end of that.

So what should I do? What should I say?

Bad Blood

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

Dear Bad Blood,

“…and I miss my $20,000.”

If your friendship is that important to your friend, she should have led with her amends. The price of that is $20,000. The most interesting, if not surprising, thing about her text message is that it focused on how she feels, and her needs. It does not address the harm she has done to your friendship — possibly irrevocably.

U.S. states have a dollar limit on small-claims court cases. Unless you live in Delaware, Texas or Tennessee, it seems that your dispute with this friend exceeds that amount in other states. But that also speaks to the amount of money she pocketed. It’s a lot of money, and it should not be brushed off so lightly. Think again about taking legal action.

Enough texting. Meet her face to face. Tell her that you had to pay the mortgage while she lived there rent-free, and remind her that she is not the only person with financial responsibilities, and that she abdicated her duty to you as a tenant and as a friend to pursue her needs. She used your friendship as leverage to scam free rent.

She cannot repair the friendship until she has repaid the debt.

The Moneyist: My boyfriend talked me into depositing my paychecks into his bank account, and paying for a car in his name. What can I do?

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 group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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Americans are opening their wallets, and ready to splurge (mostly on one thing)

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Have vaccine. Will travel.’ Schwab’s 2021 Modern Wealth Survey concluded that Americans are dreaming most about traveling (40%) and socializing (30%) and taking a vacation (24%).


PATRICK T. FALLON/AFP via Getty Images

American spending habits are about to get real.

As vaccination rates increase in the U.S., so will people’s willingness to open their wallets. Nearly half (47%) of people polled by Charles Schwab
SCHW,
-2.14%

 are keen to live large, and get back to their spending levels before the COVID-19 pandemic. What’s more, almost a quarter (24%) say they want to splurge and make up for lost time, the survey, released Wednesday, found.

The No. 1 on people’s spending lists? Getting the hell out of dodge, and hanging out with family and friends. The Schwab 2021 Modern Wealth Survey concluded that Americans are dreaming most about traveling (40%), socializing (30%), taking an extended vacation (24%), dining out at upmarket restaurant (21%) or throwing a party for family and friends (15%).

“Many are starting to see the light at the end of the tunnel,” said Jonathan Craig, head of Investor Services, Charles Schwab. Indeed, a majority of Americans (54%) reported having gone out to eat over the past week, according to the latest Axios-Ipsos Coronavirus Index, marking the first time in more than a year that more than half of respondents have reported doing so.


Exhaling after a year of being at home, people just want to get away.

Like the Charles Schwab survey, the index also said people just want to get away. Nearly six in 10 said they’ve visited relatives or friends over the past week, another record high for the survey. Majorities of both vaccinated and unvaccinated Americans are engaging in these activities, according to the poll, which surveyed 1,078 U.S. adults between May 7 and May 10.

After more than a year of quarantine and illness, people are ready to exhale. “We’re also seeing a healthy balance — even as many people are eager to get out to spend, they also want to nurture newfound, healthy savings and investing habits developed over the last year, and it seems that will be an ongoing marker of this next chapter,” he said.

There has been a substantial decline in credit-card balances in the first quarter of 2021. “However, surging retail sales volumes suggest that a combination of stimulus checks, increased consumer confidence, and pent-up demand are both supporting consumption and also helping borrowers reduce revolving debt balances,” said Andrew Haughwout, senior vice president at the New York Fed.

But they also face rising student-loan, auto-loan and mortgage debt, which could put a dent in people’s willingness or ability to finally see some sights beyond their zip code. Student debt rose by $29 billion to $1.58 trillion in the first quarter. The Dow Jones Industrial Average
DJIA,
-1.99%
,
the S&P 500
SPX,
-2.14%

 and the Nasdaq
COMP,
-2.67%

 were all lower Wednesday.


People face significant headwinds as they finally break out of isolation.

Indeed, millions of people face significant headwinds as they finally break out of isolation, and start feeling more confident about the economy. The economic environment during the coronavirus pandemic strained their finances (31%), while 26% faced a salary cut or reduced hours, and 20% said they were laid off or furloughed, the Charles Schwab survey said.

Many Americans will likely be hit by higher prices if/when their spending gains momentum. Consumer prices rose sharply in April, with the rate of inflation hitting 4.2%, up from 2.6% in the prior month — the highest level in nearly 13 years, signaling greater stress on the economy as businesses grapple with supply shortages. Exhibit A: used-car prices.

One wrench in Americans’ desire to travel by plane or car: Retail gas prices just topped $3 a gallon for the first time in more than six years, according to GasBuddy. The national average price for regular unleaded gas was at $3.02 a gallon. Gas prices have been ticking up after the Colonial Pipeline ransomware attack, although that has affected some parts of the country more than others.

What’s more, the economic recovery reveals two very different Americas. The latest jobs figures showed a stark divide among workers, both in their ability to get jobs and hang onto them during the pandemic. While critics have said Americans are staying home because of enhanced unemployment benefits, the official U.S. unemployment rate rose again in April to 6.1% from 6% the previous month.

Still, there are signs of normality, or a new normal, returning. On Wednesday, Broadway star Patti LuPone said Steven Sondheim’s “Company” was 10 days from opening on Broadway last year when the show was suspended. It will begin previews on Dec. 20. In a video on Twitter
TWTR,
-4.12%
,
she said, “Welcome back to Broadway, and when we’re together again it will be one hell of a show.”

The Moneyist: Is it ethical for cruise lines, venues, schools or Broadway to restrict entry to people not vaccinated against COVID-19?



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