After two months without federal financial aid, the economic recovery is faltering, and the U.S. economy needs an immediate infusion of $1 trillion to $2 trillion to be shared among workers, businesses of all sizes, and state and local governments, according to economists surveyed by the New York Times.
“The risk to waiting” longer for additional stimulus “is that we may find ourselves in a place where we’re unable to turn back,” said economist Karen Dynan, a treasury department official in the Obama administration. “We’ll hit a tipping point.”
“Failure to act will have real economic consequences,” agreed Glenn Hubbard, chair of George W. Bush’s Council of Economic Advisors. He is calling for $1 trillion in immediate, widespread aid.
Already, about 850,000 U.S. small businesses – one in every seven – have closed permanently, according to the marketing platform Womply. As many as 36,000 franchise businesses could close this year if government relief is not forthcoming, the International Franchise Association estimates.
Allstate is cutting 3,800 jobs, about 8 percent of its payroll. Goldman Sachs is ditching 400 workers. Over the summer, Disney announced 28,000 layoffs. U.S. airlines and other major companies already have begun permanently laying off thousands of workers.
In September, federal, state and local governments dismissed 216,000 employees, the U.S. labor department reported. Analysts expect more public-sector job cuts as agencies cope with shrinking revenues.
Without another round of federal help, the economy will have four million fewer jobs by 2022, said Ernest Tedeschi, an economist at Evercore ISI.
Top officials of the U.S. Federal Reserve have called repeatedly for new stimulus measures. “Absent a new package” of stimulus spending, “growth could decelerate at a faster-than-expected pace in the fourth quarter” of this year, the group noted in the minutes of the central bank’s September meeting.
The emergency $600 weekly federal unemployment benefit expired at the end of July, leaving millions of households to survive on a few hundred dollars a week in state aid. Although businesses have begun to recall furloughed workers, rehiring slowed last month.
Democrats in Congress have proposed a stimulus plan of $2.2 trillion to $2.4 trillion. Republicans have countered with a $1-trillion offer that does not include the $600 weekly unemployment stipend. President Trump had previously offered a $1.8-trillion proposal but has since indicated he might not support resuming negotiations.
Discussions between House Democrats and Trump administration officials have deadlocked, with both sides unwilling to compromise ahead of the 3 November election.
TREND FORECAST: Regardless of who wins The Presidential Reality Show®, over the next few years, we forecast several trillion dollars will be injected into equities and the economy as the “Greatest Depression” worsens.
Again, the more money they inject, the further the dollar falls and the higher gold and silver prices rise.
