Oregon Office of Economic Analysis

One of the main goals of federal policy at the start of the pandemic was to ensure households were kept afloat financially. The primary ways policy has been able to do this was through enhanced unemployment insurance benefits and recovery rebates. But as one of our advisors points out there were a number of other items as well including rent assistance, eviction and foreclosures moratoriums, student loan deferrals, the new child tax credit and the like. While those may be on a smaller scale, they all work toward improving household cash flow and overall finances. From a high level perspective, these federal policies have more than achieved their goal. Incomes are higher today than before the pandemic. Of course these policies all were, or are temporary. The rebates are over, UI ends in a couple of weeks, and the others are scheduled to end in a few months, although policymakers are looking to extend the CTC on its own merits and not as any sort of pandemic assistance. The good news is underlying incomes absent the direct federal aid have recovered as well.

When talking about the economy, and labor supply our office always highlights the strong household finances. We make sure to mention that it is not just unemployment insurance boosting incomes and potentially holding back some workers today, but rather you need to take a look at the overall picture. That’s one reason we do not expect a flood of job applicants the week after enhanced UI ends, even if UI is a big piece, probably the biggest, to the overall labor supply puzzle.

Case in point is this edition of the Graph of the Week. Since the start of the pandemic, recovery rebates have added about $13 billion to Oregonian incomes, and unemployment insurance about $11 billion based on the latest data from the BEA and our office’s estimates. Combined these represent an 11 percent boost to incomes over the past 18 months*.

While it looks like this chart is getting left on the cutting room floor of our forecast document next week, I wanted to make sure it was shared here on the blog as it makes a compelling visual of the impact of federal policy during the pandemic.

* 2019 statewide income was $224 billion, so (13+11)/224 = .11