It was what financial markets had been waiting for and the catalyst for the recent rally in U.S. stocks. But by the time news broke that Congress had finally reached agreement on a second economic relief package, stock and bond prices were falling, though the Dow Jones moved into positive territory late Monday.
News of a fast-spreading strain of the coronavirus in the United Kingdom, Denmark and South Africa revived worries about the global economic recovery and overwhelmed the positive impact of the $900 billion U.S. economic relief bill.
Still the fiscal relief package should “provide some relief” for the U.S. economy, whose recovery is already slowing down because of the “resurgent pandemic” in the U.S., wrote David Kelly, chief global strategist at JPMorgan Funds, in his weekly outlook
Kelly was referring to the growing number of infections, hospitalizations and deaths in the U.S. due to the COVID-19 virus, which has persisted well before the latest news from the U.K.
The relief package reportedly includes $600 checks per adult or child below certain income levels, an 11-week $300 enhancement to weekly unemployment benefits along with extended unemployment benefits and and close to $300 billion in new forgivable Paycheck Protection Payment loans with expanded coverage.
In addition, there’s a month-long extension for the moratorium on eviction to Jan. 31, 2021, $25 billion in rental assistance and tens of billions of dollars for schools, for the purchase and distribution of vaccines and enhanced testing and for airlines and transportation infrastructure.
Businesses receiving PPP loans that have been forgiven reportedly will be able to deduct businesses expenses paid from those loans, which the IRS had previously disallowed.
The “short-term nature” of the relief package, however, “underscores the need for a further relief package in the new Congress,” wrote Kelly.
Views of Moody’s Zandi
Mark Zandi, chief economist at Moody’s Analytics, said the relief plan is coming “just in time” for the U.S. economy whose recovery is flagging as evidenced by rising unemployment claims, sagging retail sales and renewed restrictions on businesses due the expanding pandemic.