Economists have warned that the lack of any new government stimulus will slow America’s economic recovery, putting millions of people at risk in one of the worst job markets in history.
More than 22 million Americans lost their jobs in the early weeks of the Coronavirus Pandemic, and there are still almost 11.5 million people out of work. Job growth has slowed after a strong resurgence during the summer.
The lack of government aid could mean the closure of more businesses. And a slower economic recovery overall.
Tens of Millions Still Receiving Jobless Benefits
25 million people are still receiving jobless benefits from state governments, suggesting that the real unemployment figure is much higher than reported. Many of these people will lose their benefits by December if there is no new stimulus enacted either before or shortly after the November election.
Stimulus looks improbable today, due to a stalemate in Congress. The Republican party has remained focused on filling an empty seat in the Supreme Court, while Democrats in the House have failed to convince the Senate majority to take up their now months-old stimulus bill.
President Donald Trump suggested that short-term stimulus could come in the form of another round of $1,200 checks for households, but there has been no progress made in this area as of today.
Republicans tried to pass $500 billion in funding this week, but the proposal failed in the Senate due to lack of support, especially from the Democratic side where lawmakers have said that the proposal offers too little to make an impact.
Even if a bill is passed before the November 3 election, it will likely be much smaller than the package originally proposed by the House. It will also be smaller than the original Coronavirus aid package passed by lawmakers in the spring.
Analysts predict that any new stimulus would be worth less than $2 trillion.
Federal Reserve Unimpressed by Lack of Stimulus
Officials at the Federal Reserve have criticized lawmakers for their lack of action and inability to negotiate. Federal Reserve Governor Lael Brainard said this week that “Apart from the course of the virus itself, the most significant downside risk to my outlook would be the failure of additional fiscal support to materialize.”
Brainard said that targeted support from Congress could turn an uneven recovery into a “broad-based” one that would support households as well as businesses.
Stock markets are performing mildly today, although major indexes are up in the year so far. The upcoming election and the government’s response to the Coronavirus will have a direct impact on investor sentiment in the coming months.
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