Without more relief spending, the recovery’s likely to stall
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President Trump’s messages in tweets and signals over the last 24 hours have gone back and forth on whether he supports another coronavirus relief plan.
Relief from Congress would help boost the economy and help American households and the unemployed, small businesses and giant airlines and state and local governments.
Proposals have ranged from $1.5 trillion to $3 trillion. Federal Reserve Chair Jerome Powell called Tuesday for erring on the side of spending more rather than less to keep the recovery going.
But there may be none — at least until after Election Day. What does that mean for the economy?
Back in March, Washington sent $3 trillion coursing through the economy’s veins.
One of the biggest infusions was $600-a-week in extra unemployment payments to more than 20 million jobless Americans. That expired in mid-summer, and the amount of cash going out to laid-off workers cratered, according to Jay Shambaugh, an economist at George Washington University.
“It fell from $110 [billion] in July to $34 billion in September,” he said. “So there’s this massive drop-off to the economy and also to the most vulnerable households.”
Those $1,200 relief checks from the spring have been spent. With most of the federal pandemic relief now gone, “we’ve seen a slowing of retail sales and personal spending,” said Joseph Brusuelas, chief economist at consulting company RSM.
A quarter of small businesses have closed, he said. Brusuelas predicts without more federal support — including lending to small businesses — more will fail.
And state and local governments can’t keep teachers and other essential workers on the payroll, said Michael Graetz, professor emeritus at Columbia Law School.
“Loss of civil service jobs will disproportionately affect minorities, because they’ve been hired into those jobs,” he said.
“OK, let’s say we don’t have a stimulus package, the economy gets pretty severely damaged in the short term — probably four or five years to get back to full employment,” said Dan North, chief economist at credit insurer Euler Hermes North America.
The burden is falling to families, that are running out of time and money, Graetz said.
“People are facing evictions, difficulty paying for food and lodging. This is a desperate situation,” he said.
One that the chaos in Washington isn’t making any better.
COVID-19 Economy FAQs
New COVID-19 cases and deaths in the U.S. are on the rise. How are Americans reacting?
Johns Hopkins University reports the seven-day average of new cases hit 68,767 on Sunday — a record — eclipsing the previous record hit in late July during the second, summer wave of infection. A funny thing is happening with consumers though: Even as COVID-19 cases rise, Americans don’t appear to be shying away from stepping indoors to shop or eat or exercise. Morning Consult asked consumers how comfortable they feel going out to eat, to the shopping mall or on a vacation. And their willingness has been rising. Surveys find consumers’ attitudes vary by age and income, and by political affiliation, said Chris Jackson, who heads up polling at Ipsos.
How many people are flying? Has traveled picked up?
Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.
How are Americans feeling about their finances?
Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.
Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.
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