Another stimulus package is “back on track,” with a $1 trillion-plus deal likely to beenacted by early August, Greg Valliere,chief U.S. policy strategist at AGFInvestments, predicted in mid-June.
Two reasons are stoking momentumfor the next package, according to Valliere.
First, the pandemic “obviously isn’t
over yet,” he said. “New cases are spik-
ing (in part because of more testing),
and may stay at high levels because
social distancing was [sometimes]
ignored in recent protests. People are
still tentative about going to restau-
rants, malls or on trips (the battered
airline stocks are a barometer).”
A V-shaped recovery “never seemed
very likely, and now a fresh wave of
virus anxiety has Fed Chairman Jerome
Powell worried about the considerable
downside risks to the economy and the
markets,” he said.
The Fed will lend extensively, Valliere
said, “but Powell insists that Congress
also has to act. And Treasury Secretary
Steven Mnuchin has been increasingly
adamant this week that another stimulus
package is virtually mandatory as state
and local layoffs loom this summer.”
The second reason a stimulus bill will
get done is that the “three key factions in
the stimulus debate all have skin in the
game, and will push for their agendas,”
House Speaker Nancy Pelosi and the
Democrats will press for “massive aid
to state and local governments,” Valliere
said, and “they’ll win at least $500 bil-
lion, but that may not be enough.”
Senate Majority Leader Mitch
McConnell and the Republicans see
“some type of liability protection for
companies [as] a ‘must pass.’ The details
aren’t clear — will there be a federal
fund to aid companies that are sued? —
but there will be some type of lawsuit
protection in the final measure.”
All of the players, Valliere noted, “are
willing to consider another cash payment
to individuals, perhaps not as generous
as the initial $1,200 checks.” However,
a sticking point will be unemployment
benefits, which expire at the end of July.
“Something far less than the initial$600 per week is possible, but the focuswill be on incentives to get people backto work,” Valliere opined.
Meanwhile, the Paycheck ProtectionProgram, created under the CARES Act,had approved a total of $510.2 billionloans as of May 30, S&P Global reported.
The average loan size for total PPPapprovals was $114,000, with 4.475 million loans approved.
The average loan size for the firstround of PPP stimulus was almost twicethat size, at $206,000, with 1.66 millionloans approved, S&P Global reported.
“With approximately 30 million smallbusinesses in the U.S., this was apparent
By Melanie Waddell
Next Round of Stimulus Likely in Early August
American Institute of CPAs’ study found that 56% of business executives
sought Paycheck Protection Program relief funds.