Sunday, September 24, 2023

Top economists say that’s what’s on their stimulus wishlist – and bipartisan bill looks pretty close

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It has been clear in the data for a while: The economic recovery is slowing. At the same time, the window for more stimuli to help boost that recovery is narrower than ever.

This rate of deceleration was even more evident in unemployment data released on Friday, showing only 245,000 jobs were added in November – raising the unemployment rate from 6.9% to 6.7%.

The report comes as Congress progresses on a new $ 908 billion stimulus bill, this time with bipartisan support. Even House Speaker Nancy Pelosi, who has long called for billions of dollars in aid, said the smaller bill was a good starting point for further negotiations.

But with the economic recovery slowing and a winter without a widely distributed vaccine, some economists are feeling exasperated by Capitol Hill: “Come on, already!” exclaims Mark Zandi, chief economist at Moody’s Analytics.

“If we don’t get this help, [Friday’s unemployment] The report suggests that the economy will start to reverse, we will start to lose jobs and unemployment will start to rise again, ”says Zandi Fortune. Without more stimulus, “there’s a good chance it will go down in history as a double-dip recession,” he said.

Michelle Meyer, head of the US economy at Bank of America, is slightly more optimistic: “There is a clear economic case for stimulus, but I think it’s important to remember that the economy has continued to recover, has continued to heal,” she said . Fortune. “Another round of stimulus will just speed up this healing process in a way that could be very powerful for the growth trajectory once we get the vaccine.”

But what is on economists’ wishlist for a stimulus bill to bridge the gap between a struggling economy and an economy liberated by vaccines?

Main recovery priorities

For Meyer of Bank of America, a few things are high on the list: more funds for testing and a vaccine (“clearly number one,” she says), pandemic unemployment insurance (which includes larger groups such as freelancers and construction workers who are set to lose access next year), and small business support is its top three.

In a broader sense, “the first priority is, at the end of the day, households that have no jobs, have no savings,” explains Moody’s Zandi.

He agrees that having more money for the unemployed, testing and small businesses is essential, and that rental aid, support for transport such as airlines and state and local funding are also needed. essential: “These are all, I think, things that are needed to move the economy to the other side of the pandemic,” he said.

Liability insurance, a key Republicans demand, and state and local funding, a Democratic sticking point, are both good ideas, Zandi says. And Meyer thinks that “at the end of the day, to get a bill through, they’ll have to have a bit of both.”

To be sure, it all adds up pretty quickly. But the latest bipartisan proposal ticks many of those boxes for Zandi and Meyer.

the the bipartite proposal currently includes $ 180 billion for improved unemployment benefits, $ 288 billion for financing small businesses, $ 16 billion for tests and the vaccine, and $ 25 billion for rent assistance (plus, some 180 billion dollars for state and local funding).

As a bridge to the other side of the pandemic, “I think they’ve done it right,” Zandi says.

Besides unemployment and support for small businesses, Zandi argues that rent assistance is also a key part of another deal, especially with the moratoriums on evictions expiring at the end of the year. “This has a very increased need because either you’re going to have people kicked out in the middle of winter, in the middle of a raging pandemic, or you’re really sticking with a lot of mom and pop owners,” notes he. “It’s not that expensive, so check it out.”

Granted, the price is much lower than the Democrats ‘previous $ 2.2 trillion and above the Republicans’ $ 500 billion deal, but economists like Meyer argue that around $ 1 trillion of stimulus is “probably appropriate to get us through the next few months”.

“ Covered ” dunning checks are not essential

One thing that do not on Zandi or Meyer’s wishlist? No more stimulus controls. the in particular, the new bipartite bill does not include more than $ 1,200 in direct payments, which has already caused a sensation among some in Washington, notably President-elect Joe Biden and Sen. Bernie sanders. But economists like Meyers and Zandi argue that now more “targeted” support is needed.

“There are very distinct differences in the way people are doing,” from those who have been successful in keeping their jobs to those struggling with unemployment or in hard-hit industries, “so I don’t think so. not that we need a global stimulus check at this point, ”Zandi said.

Regardless of the line items, a a smaller note seems more likely now (up from $ 2.2 trillion or $ 3 trillion asked of Democrats earlier this fall) due to time constraints: Congress has until Dec. 11 to pass spending bill and additional stimulus , and Republicans are unlikely to sign a massive deal.

Adds Zandi: “At this point, earlier than bigger is better.”

More to read absolutely financial cover of Fortune:


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