With less than a month to go before Election Day, the pandemic-driven economic outlook is not a good one.
Households and businesses have gone two months without the enhanced unemployment benefits, low-interest loans and other programs that helped prop up the economy in the spring.
President Trump announced on Tuesday that he was cutting off stimulus negotiations until after the election. He later added confusion by urging Congress to act “IMMEDIATELY” to revive a lapsed loan program for small businesses and to approve funds for airlines and another round of stimulus checks.
But the only talks that seemed to be moving forward at all on Wednesday were on airlines. Speaker Nancy Pelosi of California and Steven Mnuchin, the Treasury secretary, spoke in the morning about the prospects of a stand-alone bill for airline relief.
Jerome H. Powell, the Federal Reserve chairman has argued that failing to provide enough support carried risks for the economy.
“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” he said in a speech on Tuesday.
Already, many furloughs are turning into permanent job losses, and major companies like Disney and Allstate are embarking on new rounds of layoffs. The hotel industry is warning of thousands of closures, and tens of thousands of small businesses are weighing whether to close up shop for good. An estimated one of every seven small businesses in the United States had shut down permanently by the end of August — 850,000 in all — according to data from Womply, a marketing platform. The deeper those wounds, the longer the economy will take to heal.
After President Trump indicated that he might want to revive some stimulus measures, stocks on Wall Street rose on Wednesday, broadly erasing Tuesday’s losses. The bounce was just the latest in a series of head-spinning turns for the market.
The gridlock in Washington is a reversal from the spring, when lawmakers acted out of fear of an imminent economic collapse and approved trillions of dollars in aid to households and businesses. The effort was largely successful.
But most of the aid programs expired over the summer, and in recent weeks economic gains have faltered. Economists across the ideological spectrum agree that the loss of momentum is likely to get worse if more aid doesn’t arrive soon.