STIMULUS FREEZE MEANS SLOWER RECOVERY
November 5, 2020 - Douglas Myser
Stimulus freeze means slower recovery. The failure of Washington to deliver another big dose of stimulus before the election probably won't tip the economy back into recession, economists say, but the lapse in aid threatens to destroy more businesses, inflict greater pain on millions of unemployed Americans and drag out a recovery. The most vulnerable are the nearly 11.5 million people who were laid off early in the pandemic and are still out of work, economists say. So far the U.S. has only regained about half of the 22 million plus jobs lost, and the rebound in hiring has slowed sharply since the summer. On top of that, 25 million people were receiving jobless benefits as of last week. What's worse, many of them are set to lose extended unemployment benefits at the end of December under current law. Stimulus freeze means slower recovery.
Many businesses whose customer traffic has dried up due to government restrictions and fear of the coronavirus are also in a precarious spot. As many as one-fourth of all small businesses that are still open might be forced to close if they don't get more help or if the economic recovery falters, estimates chief economist Joe Brusueas of RSM, an advisory firm for midsized companies. "We have to decide if we are going to keep them open and the people that work for them afloat," said Brusuelas, who's been outspoken about the need for more aid. "Washington should move as quickly as possible to put the biggest stimulus on the table."
A huge stimulus in the next few weeks seems highly improbably. For almost three months Democrats and Republicans have negotiated on and off to renew extra unemployment benefits and provide a financial lifeline to businesses both big and small that have been most harmed by the coronavirus pandemic. Those benefits expired in July. Without extra aid, even more businesses will go under.