Based on income and family makeup, about 90% of Americans may expect to receive $1,200 individually ($2,400 for joint filers) and $500 per dependent.
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 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.
Life may feel a little chaotic these days, but we hope you take some comfort in knowing you have a financial plan tailored to your risk tolerance and ability to handle market volatility. If you have any questions, please reach out to your advisor.
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.