- Trump ended abrupt stimulus talks on Tuesday, delaying federal coronavirus aid for more than all the remaining months.
- “That means more people will sink into poverty and make terrible choices between rent, medicine and food at the table,” said Heidi Shearerholz, a senior economist at the Institute for Economic Policy.
- The country’s economic recovery is already in turmoil and could return in the coming weeks, another expert said.
- Visit Business Insider’s homepage for more stories.
President Donald Trump on Tuesday abruptly pulled the strings of negotiations for a second coronavirus spending package, ending the prospect of additional federal relief ahead of the November election.
The announcement on Twitter triggered a sharp decline in the stock market, with the Dow Jones industrial average immediately outperforming the market by 376 points. Delays in the arrival of epidemic assistance, especially in rest restaurant rentals, increase the likelihood of more small business failures. The National Restaurant Association said 40% of restaurant owners would go bankrupt in the next six months without government assistance.
Many economists have long urged Congress to pass a second aid bill to keep individuals and businesses afloat, showing signs of ending soon. About 26.5 million people are still receiving unemployment benefits and permanent job losses are rising.
Without additional assistance, experts say, millions of unemployed Americans could ruin their economic situation, and return to the already shaky economic recovery.
“This is incredibly cruel and just terrible economics,” Heidi Shearholz, policy director at the left-leaning Economic Policy Institute, told Business Insider. He drew the attention of people to unemployment, they draw about 40% of the lost wages.
The average weekly unemployment check size is around $ 330, the amount varies greatly from state to state.
“They have negligible advantages and people don’t exist on them,” Shiroz said. “It means more people will sink into poverty and make terrible choices between rent, medicine and food at the table.”
Michelle Evermore, a policy expert with the National Employment Law Project, told Business Insider that without a second short-term government rescue package, difficulties would increase among the unemployed.
“It’s frustrating that so many people get in trouble even though we’re close to getting something.”
Evermore warned that some states are accidentally trying to overpay people employed, which in many cases has already been spent. He said the Democratic aid proposal included a legislative amendment.
The U.S. economy has recovered about half of the jobs lost in March and April due to the epidemic. The risk of this backtracking is now higher as more families pull back on their expenses, said Ernie Tedeshi, policy economist at Evercore ISI.
“Even if we don’t see backtracking, I think we’re likely to see much slower growth than otherwise.” “It’s not needed anymore, because growth has already slowed.”
The latest jobs report showed 661,000 jobs were added to the U.S. economy in September, the smallest monthly increase since the start of the labor market in April.
“The slowdown in job growth means that it will take us more and more time to fully recover from this recession,” he said. “But it will be detrimental to individual families in any way.”
Federal Reserve Chair Jerome Powell on Tuesday raised his warnings of a weak recovery, but urged Congress to pass another federal aid package.
“Very little support will lead to a weak recovery, which will also create unnecessary difficulties for homes and businesses,” Powell said at an event hosted by the National Association for Business Economics.
