It has been clear from the data for some time that the economic recovery is slowing. At the same time, the window for more stimuli to promote this recovery is narrower than ever.
That slowdown was even more evident in the unemployment data released on Friday. They showed that only 245,000 new jobs were created in November, bringing the unemployment rate down from 6.9% to 6.7%.
The report comes as Congress makes progress on a new $ 908 billion bill, this time with the support of both parties. Even House spokeswoman Nancy Pelosi, who has long been pushing for several trillion dollars for aid, said the smaller bill is a good starting point for further negotiations.
But with the slowdown in economic recovery and a winter without widespread vaccine, some economists are upset with Capitol Hill: "Come on!" exclaims Moody & # 39; s Analytics chief economist Mark Zandi.
"If we don't get this help, the report (Friday's unemployment) suggests the economy will pull back, we will start losing jobs, and unemployment will rise again," Zandi told Fortune. With no further incentive, "There's a pretty good chance this will go down in history as a double-dip recession," he believes.
Michelle Meyer, Head of US Economics at Bank of America, is a little more optimistic: “There's a clear economic case for the incentive, but I think it's important to remember that the economy continues to recover and continue to recover has healed, ”she tells Fortune. "Another round of stimuli will simply accelerate this healing process in a way that could be very effective on the growth path once we have the vaccine."
But what kind of stimulus package is on economists' wish lists to bridge the gap between a battered and vaccine-free economy?
Top stimulus priorities
For Meyer at Bank of America, there are a few things high on the list: more funding for tests and a vaccine ("clearly number one," she says), pandemic unemployment insurance (which includes extended groups like freelancers and gig workers that should lose access next year) and help for small businesses make up their top three.
In a broader sense, "the bottom line is that those households who don't have jobs have no savings," says Moody & # 39; s Zandi.
He agrees that more money is vital for the unemployed, test subjects and small businesses, and that rental support, assistance for transportation like airlines, and government and local funding are also crucial: “These are all things that I believe are necessary Bridging the economy to the other side of the pandemic, ”he explains.
Liability insurance, a major Republican issue, and state and local funding, a Democratic sticking point, are good ideas, Zandi says. And Meyer says: "Ultimately, you have to have a little bit of both to get a bill through."
That adds up pretty quickly, though. But the latest bipartisan proposal meets many of those criteria for Zandi and Meyer.
The bipartisan proposal currently includes $ 180 billion for higher unemployment benefits, $ 288 billion for small businesses, $ 16 billion for testing and the vaccine, and $ 25 billion for rental support (up roughly $ 180 billion for state and local funds).
As a bridge to the other side of the pandemic: "I think you got it right," says Zandi.
In addition to unemployment and small business support, Zandi says rent support is also an important component of another deal, especially if the eviction moratoria expires at the end of the year. "That has a very increased need, because either people are displaced in the middle of winter, in the middle of a raging pandemic, or you really stick to a lot of mom and pop landlords," he states. "It's not that expensive, so check it out."
Sure, the price is much lower than the Democrats 'previous $ 2.2 trillion worth and above the Republicans' $ 500 billion deal, but economists like Meyer argue that about $ 1 trillion in incentives is "likely." adequate to get us through the next few months ".
Stimulus checks with "blanketed" are not absolutely necessary
Something that is not on Zandi's or Meyer's wish-list? Further stimulus checks. Specifically, the new bipartisan bill does not include additional direct payments of $ 1,200, which has already caused a stir among some in Washington, including President-elect Joe Biden and Senator Bernie Sanders. However, economists like Meyers and Zandi argue that more "targeted" support is needed now.
"There are very marked differences in the way people are doing" between those who have been able to keep their jobs versus those struggling with unemployment or in heavily affected industries. "So I don't think we need a comprehensive stimulus check." at this point, ”believes Zandi.
Regardless of the individual line items, a smaller bill is now more likely due to the time crisis (compared to the $ 2.2 trillion or $ 3 trillion the Democrats asked for early fall): Congress has until December 11th to issue a Spending Billing and Additional Incentives to Say Goodbye Republicans are unlikely to sign a massive deal.
Adds Zandi: "At this point, it's better to be earlier than taller."
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