- Trump abruptly ended stimulus negotiations on Tuesday, delaying more federal aid for the coronavirus until next month.
- “It will mean more people fall into poverty and people make terrible choices between rent, medicine and food on the table,” Heidi Sherholz, chief economist at the Economic Policy Institute, told Business Insider.
- Another expert said that the country’s economic recovery is already volatile and may ease in the coming weeks.
- Visit Business Insider’s homepage for more stories.
President Donald Trump abruptly halted negotiations on another coronavirus spending package on Tuesday, ending the prospect of an additional federal waiver before the November elections.
The announcement on Twitter sparked a sharp decline in the stock market, with the advent of Dow Jones Industrial Average Erase winnings instantly ending the day 376 points less. The delay in the arrival of epidemic aid raises the possibility that more small businesses will fail, especially among restaurants. The National Restaurant Association said 40% of restaurant owners will go bankrupt in the next six months without government help.
Many economists have long urged Congress to pass another aid bill to keep individuals and businesses afloat with the pandemic emerging with few signs of an end soon. About 26.5 million people still receive unemployment benefits, and permanent job losses are increasing.
Without additional aid, experts say the millions of unemployed Americans could have their finances shattered and set back an already fragile economic recovery.
“This is an incredibly tough economy, and it’s also just a terrible economy,” Heidi Sherholz, policy director at the left-leaning Economic Policy Institute, told Business Insider. She noted that the unemployed usually withdraw about 40% of their lost wages.
The average size of the weekly unemployment check is around $ 330, an amount that varies widely from state to state.
“They are little benefits people cannot live with,” Sherholz said. “It will mean more people will fall into poverty and people make terrible choices between rent, medicine and food on the table.”
Michael Evermore, a political expert on the National Employment Bill, told Business Insider that the hardships will likely increase among the unemployed without another government bailout package in the short term.
“It is disappointing that so many people will have to suffer despite the fact that we were close to getting something,” she said.
Always warned some states Try to get a refund They mistakenly overpayed the unemployed, which in many cases has already been spent. She said that legislative reform was included in the aid proposal for the Democratic Party.
The US economy has only recovered half of the jobs it lost in March and April at the height of the pandemic shutdown. Ernie Tedeschi, a political economist at Evercore ISI, said he’s now at risk of further downturns as more families cut back on their spending.
“Even if we don’t see a downturn, I think we’re likely to see much slower growth than we would otherwise have seen,” Tedeschi told Business Insider. “These are headwinds that we don’t need right now because growth is already slowing.”
The latest jobs report showed the US economy It added 661,000 jobs in September, Less than half of the previous month’s figure and by far the smallest monthly increase since the job market hit its bottom in April.
“As job growth slows, this means it will take a longer and longer time to fully recover from this recession,” he said. “But for single families, that would be harmful anyway.”
Fed Chairman Jerome Powell stepped up his warnings of a weak recovery on Tuesday, and urged Congress to pass another federal aid package.
“Lack of support will lead to a weak recovery, creating unnecessary hardship for families and businesses,” Powell said He said at an event he hosted By the National Association for Business Economics.