Trillion dollar stimulus on the way
Another historic day. Lawmakers in Washington struck a compromise on a major fiscal stimulus package to help combat the effects of the COVID-19 pandemic. The bill, already passed by the Senate and awaiting House vote, packs in a lot, with upward of $2 trillion slated to provide important support for the economy, explains Raymond James Chief Economist Scott Brown. In comparison, the American Recovery and Reinvestment Act of 2009 was $831 billion.
Chief Investment Officer Larry Adam concurs, saying, “While the economy is likely to temporarily struggle, the combination of monetary and fiscal stimulus efforts will mitigate the worst-case scenarios and help serve as a bridge to when normal economic activities can resume.” This optimism has helped the S&P 500 post its largest three-day rally (+17.6%) since April 1933. Prospects for positive volatility is the main reason Adam has continued to encourage investors to “stay calm and not panic” during these emotionally driven swings in the market, especially as policymakers aggressively respond to this health crisis.
Despite tense – and at times frustrating – negotiations, lawmakers put together this bipartisan package much more quickly than initially anticipated, considering the magnitude of the response. Key provisions to expand unemployment eligibility and benefits cannot come soon enough as Thursday’s unemployment report from the Department of Labor set a record high for initial jobless claims – rising by more than 3 million for the week of March 21, reflecting job losses in hospitality, entertainment, recreation, transportation and warehousing, as well as manufacturing.
And they may still do more, depending on how long the pandemic lasts. Lawmakers are already talking about another round of intervention in their phased approach. While it may take some time to see results of this broad-ranging stimulus, here’s a look at what you can expect in the near term, according to Washington Policy Analyst Ed Mills.
A check – Based on income and family makeup, about 90% of Americans can expect to receive $1,200 individually ($2,400 for joint filers) and $500 per dependent. Amounts phase out for those with adjusted gross incomes over $75,000.
Support for small businesses – in the form of more than $350 billion, including forgivable loans to help keep the business afloat, a paycheck protection plan and grants.
Expanded unemployment benefits – Unlimited funding for Temporary Federal Pandemic Unemployment Compensation to provide workers laid off due to COVID-19 an additional $600 a week, on top of state benefits, for up to four months. This includes relief for self-employed individuals, furloughed employees and gig economy workers who have lost work during the pandemic. This key support could bring the bill’s value over the $2 trillion mark.
Fortified healthcare – $150 billion is allocated to hospitals and community health centers to provide treatment and equipment to fight coronavirus, including updated OSHA standards for workers.
Enhanced education – $30 billion to bolster state education and school funding, as well as deferral of federal student loan payments through the end of September.
State and local government funding – $150+ billion allocated to “state stabilization funds” to support reduced state and local tax receipts.
Other provisions – provides a $500 billion buffer for impacted and distressed industries, including the airlines, mass transit and the postal service.
We know life may feel a little chaotic these days, but we hope you take some comfort in knowing your financial plan was tailored to your risk tolerance and ability to handle market volatility. If you have any questions, please reach out. In the meantime, we are thinking of you and your family and wishing you all good health.
As we all gain our bearings, we’ll continue to keep you updated with relevant, and hopefully, useful information. You can find the latest on the coronavirus and market volatility here.
Thank you for your trust in us.
PriorityOne Financial Services / Raymond James Financial Services
220 Main Ave N, PO Box 516
Magee, MS 39111
Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of Raymond James and are subject to change. There is no assurance that any of the forecasts mentioned will occur. Economic and market conditions are subject to change.
Material prepared by Raymond James for use by its advisors.
© 2020 Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC, and are not insured by FDIC, NCUA, any other government agency or any other financial institution insurance, are not deposits or obligations of the financial institution, are not guaranteed by the financial institution, and are subject to risks, including the possible loss of principal. The financial institution and the investment center are not registered broker/dealers and are independent of Raymond James Financial Services.
PriorityOne Bank and PriorityOne Financial Services are not registered broker/dealers and are independent of Raymond James Financial Services. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.
Securities offered through Raymond James Financial Services, Inc. member FINRA/SIPC.
Please visit https://www.raymondjames.com/legal-disclosures/social-media-disclaimer-icd for Additional Risk and Disclosure Information. Raymond James does not accept private client orders or account instructions by email
Investment products are: Not deposits. Not FDIC or NCUA insured. Not guaranteed by the financial institution. Subject to risk. May lose value.