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Hunt Financial Planning

Have we done enough?

monetary fiscal policy health emergency virus







Based on a study by the CSIS, the US has spent over $2.9 Trillion dollars or 13.6% of our 2019 GDP on stimulus packages to battle Covid19.  That is a staggering amount of support in the form of cash payments to individuals, unemployment enhancements, student loan payment suspension, loans and grants to small (and many very large) businesses through the Paycheck Protection Program and Economic Injury Disaster Loans.  That does not consider the action by the Federal Reserve in increasing its’ balance sheet and committing to lower rates.

The scale of $3 Trillion dollars is hard to even comprehend.  If you spent $20 a second, you would go through $72,000 an hour, about $1.728 Million a day or $630 Million a year… you would only have to keep that pace up for around 4,756 years to hit the $3 Trillion mark!  That is a lot of support and that does not include the other countries around the world providing their own stimulus. 

Unfortunately, I do not think it will be enough.  To quote Sheriff Brody from Jaws, “You’re going to need a bigger boat.”

The PPP program was a huge lifeline for businesses, unfortunately some of the provisions initially were such that businesses were all but forced to rehire workers that they had no use for to qualify for loan forgiveness.  Monthly payroll reports are showing improvement, but this uncertainty about actual employer needs makes their accuracy hard to rely on and re-closings do not bode well for long term continued employment trends.  Recent changes to the program have helped as the payroll requirement was reduced to 60% (leaving additional funds that business could use on rent for instance) and the time to use the funds has been extended to 24 weeks.  That coupled with provisions allowing for forgiveness for businesses that physically cannot open at full capacity, think restaurants or medical facilities not allowed to perform elective procedures, should help as well but larger business stimulus is needed.

The unemployment assistance program that is providing an additional $600 a week to the unemployed, which for the first time ever includes independent contractors, is set to expire at the end of July and needs to be extended in some form or another.  Maybe a credit for returning to work should be a consideration to act as a business subsidy to encourage re-employment or simply extend the program.  At the end of the day, hiring still has to be based on a need for workers and that is based on a demand for services, which cannot happen if states do not reopen and their populations feel safe… that won’t happen until we see continual progress made against the spread of the virus. 

Oh yeah, and to no one’s surprise, the National Bureau of Economic Research officially declared the US in a recession, with the record 128-month economic expansion peaking in February.  So, there is that.

Times are hard, there is no doubt we are making progress, but I hope we do not injure that progress with complacency on the financial, economic, or healthcare fronts.  Everyone should continue to do their own small part in taking health precautions like wearing masks when appropriate and being financially responsible, while also supporting small businesses if you are able.  The government: be it states, Congress, the Fed, or the Executive branch need to continue working together on fiscal, monetary and social policy response to get us through this and leave political squabbling aside.  We are building a bridge to get to the other side of this pandemic, and it needs to be too long, rather than too short.

I know, maybe they should work on an infrastructure project…


Photo by Bermix Studio on Unsplash