The coronavirus pandemic continues to rattle the US economy with the stock market riding a rollercoaster of constantly breaking news. And while other countries like China have battled this crisis for months now, it can be risky to compare countries with such different economies to what exactly will happen in the US. With the global economy already in recession, what can we expect from the coming months from the US government?
The real effects of the economic crisis created by the coronavirus pandemic are already being felt around the globe. Shipping has been disrupted. Consumers are staying in voluntary quarantine at home. And, in the US, where the “gig economy” has come to employ nearly a third of the US workforce, or 57 million people, services like Lyft, Uber and Airbnb see their business drying up as people are staying home. The good news is that governments around the world are recognizing that people’s income is stalling now—or perhaps already has. And state and federal governments are making moves to help.
Stimulus Broad Strokes
While the jury—and Congress—is still out on exactly what a stimulus package may be, some experts are weighing in on what it’s likely to look like. First, it’s likely to be larger than the stimulus checks of between $300 and $600 during the financial crisis of 2008. The numbers are currently hovering around $1,200 per adult and $500 per child. Not everyone is likely to be eligible, however.
The numbers being debated for eligibility for the 2020 stimulus package are $75,000 per individual or $150,00 per couple for eligibility to receive the full amount of financial relief. That amount would be reduced by 5% of the amount of a taxpayer’s income that exceeds $75,000.
While Congress is still ironing out the details of the stimulus plan, the White House has assured the country that relief should be swift, ideally by tomorrow. The goal is to start issuing the checks within two weeks of passage. But when those will land in mailboxes may be difficult to predict. Using the 2008 crisis as any indicator, it may take as long as two months for the government to start distributing the stimulus checks.
Stepping in to Stop Foreclosure
On March 18, the US government launched a coordinated effort to prevent foreclosures. The Department of Housing and Urban Development announced the suspension of evictions and foreclosures. At the same time, the Federal Housing Finance Agency (FHFA) announced that it has instructed Fannie Mae and Freddie Mac to halt evictions and foreclosures for at least 60 days. Now that the action has been defined, we may see an extension.
While nothing is certain, looking again to China’s economy as a bellwether can be useful. As they confronted the virus roughly three months before the US, they are not in the current rollercoaster of a daily increase of cases. Analysis of the way that the supply chain will be disrupted projects a slow “return to normal” of three to six months. While that sounds dire, what is important here is the ability to project a timeline. We’re no longer in the free-fall moment (economically speaking) of the beginning of the crisis.
While it’s impossible to predict the precise moves the government may take, the signs all point to strong action and rebound in the—perhaps distant—future.