New stimulus package: An economy waiting for federal oxygen

As the White House gives mixed signals about its intention (or not) to agree on a new broad stimulus bill, economists and the Fed warn of the risks of not providing financial aid to Americans and small businesses that are fighting to stay afloat.  

While the fact that the Covid-19 pandemic drags on makes the economy unable to recover as quickly as expected and keeps many Americans out of work, a new relief package continues to be delayed.

On Tuesday Trump said he had told his administration’s negotiators to end coronavirus stimulus talks with Democrats, but only two days later he said talks had been resumed and were “very productive”.

A new relief package has support from the Federal Reserve, Wall Street, Democrats in both houses of Congress, some Republicans, and the American public, so the news of the resumed talks brought optimism to most, while the economy’s recovery slows down and many Americans and small businesses still struggle to stay afloat.

A host of experts in the United States are concerned about the lack of a new relief program and have warned that not having a second round of stimulus checks would stagnate the country's economy, causing the recovery to slow even more.

While Republicans and Democrats agree that taxpayers need a new round of stimulus payments, they still can't agree on the rest of the bill's measures. 

In the interview, Mark Zandi, chief economist at Moody’s Analytics, told Bloomberg that it is likely that in the absence of a second stimulus check, the United States could experience double-digit unemployment until 2021 and "since we are in the middle of a pandemic there are many things that could go wrong."

Also, the Fed chairman, Jerome Powell, used the word "tragic" twice in a speech that referred to the country's economic and health situation, in which he insisted on the need for fiscal stimulus.

His sayings are backed by facts of reality, as job creation is slowing and consumer income is slowing as well. The relief brought by the CARES Act, which exhausted its most decisive stimuli in July, is wearing off and in its place very little remains, while Americans still struggle to stay afloat.

If finance experts are right, an agreement regarding a new stimulus bill will need to be signed and done as soon as possible, but this has been a very confusing week of back-and-forth between the Trump administration and Pelosi as the sides make a last effort to sign a bill that could bring some relief to Americans before election day.

With things changing every moment, It remains to be seen if Congress can iron out differences in time to pass another relief bill before Nov. 3.
 

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