Building A Stronger Bridge Into 2021: U.S. Congress Reaches $900 Billion Stimulus Deal

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Today, Congress is expected to pass a coronavirus relief bill, providing approximately $900 billion of new support for the U.S. economy. To cut to the chase, fiscal and monetary stimulus was and is critical for bridging affected households and businesses to the other side of this pandemic. Barring any major surprises, our view is that this latest package should be sufficient to do precisely that—to keep consumer and corporate balance sheets healthy into mid-2021 when large-scale vaccinations slow the virus and allow our lives (and economies and markets) to get back to normal again. The stimulus deal reinforces our positive economic outlook.

The good news is that we don’t need to learn a new alphabet soup of government support programs over the holiday break. The most market-relevant provisions from the stimulus package are all essentially booster shots of the most successful components from the CARES Act back in March. Based on the latest reports, the package will include:

  • $600 stimulus checks for the majority of U.S. households (down from $1,200)
  • $300 per week of federal unemployment benefits for affected workers (down from $600)
  • $284 billion of new, forgivable small business loans (down from $669 billion1)
  • Billions more in grants for severely impacted industries—i.e., airlines, movie theaters, entertainment, etc.

The dollar amounts are, clearly, smaller this time around. However, the U.S. economy has also made substantial progress recovering from the lockdowns in the spring and does not need as much support anymore to continue to grow.

While there is considerable uncertainty around short-term virus trends, our expectation is that the current economic recovery will strengthen and broaden over the course of 2021 as effective vaccines allow dislocated sectors to bounce back. The stimulus deal is important in bridging the gap to that medical solution.

A few other odds and ends before we close out the year:

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Disclosures:

These views are subject to change at any time based upon market or other conditions and are current as of the date at the top of the page.

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