President Donald Trump has signed the largest-ever US financial stimulus package, worth $2tn, as the country grapples with the coronavirus pandemic, but to what extent it provides relief to the nation’s families, workers and businesses remains to be seen.
The package aims to flood the US economy with cash in a bid to stem the impact of a pandemic that has taken the lives of more than 1,500 besides infecting more than 100,000 with coronavirus in the United States.
Some 18 US states, including New York, have issued stay-at-home directives affecting about half the population.
The sweeping orders are aimed at slowing the pathogen’s spread, but have upended daily life as schools and businesses shutter indefinitely.
The new law enables direct payments to individuals and companies whose livelihoods and businesses have been affected by the pandemic.
The massive bill includes a $500bn fund to help hard-hit industries and a comparable amount for direct payments of up to $3,000 apiece to millions of US families.
It will also include $350bn for small-business loans, $250bn for expanded unemployment aid and at least $100bn for hospitals and related health systems.
It would be the largest rescue package ever approved by Congress and the third such effort to be passed this month.
Under the law, jobless benefits will be extended to those not normally covered, such as freelancers and workers in the gig economy.
The US economy has almost certainly entered a contraction due to the Covid-19 pandemic, according to Jay Shambaugh, director of The Hamilton Project and a senior fellow in Economic Studies at the Brookings Institution.
Unemployment insurance claims reported for the week ending March 14 showed a sizeable spike, but the true contraction likely started the following week (the week ending March 21), he said.
It appears that millions of Americans have already lost their jobs, likely at a pace that exceeds job losses in the worst weeks of the Great Recession.
Even if economic activity in the United States were not being shut down in support of social distancing, the current spread of the Covid-19 pandemic around the world reduces demand in the world economy and complicates supply chains, and the drop in equity prices lowers household wealth to an extent that would have caused a sizeable slowdown in the US economy.
When those factors are added to the economic disruption needed to fight the virus, the United States will likely see one of the sharpest economic contractions in its history this March, continuing through the second quarter of 2020, Shambaugh said and noted: “The open question will be how quickly restrictions on activity are lifted and whether the economy can snap back; both will depend in part on policy responses.”
Clearly, the US and nations around the world face an economic and health emergency of historic proportions due to the coronavirus pandemic, the worst pandemic in over 100 years.
To mitigate the financial havoc and devastating economic impact caused by the coronavirus pandemic, it takes more than stimulus packages by different countries. This is the time for true global co-operation in fighting the one common enemy.
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