Illustration: Aïda Amer/Axios
The massive stimulus that U.S. policymakers flooded into the economy is starting to run dry. With some states just beginning to reopen businesses and millions still unemployed, fiscal and monetary authorities are gearing up for another round.
What's happening: As various "stay at home" measures are being lifted, so are many of the relief measures put in place to help the U.S. economy through the unprecedented coronavirus-induced shock.
- First, the group of small businesses that received $350 billion for the original eight-week term under the Paycheck Protection Program (PPP) will exhaust those funds over the next few weeks.
- The extra $600 per week in jobless benefits Congress approved in March expires at the end of July.
- The last of the $1,200 relief payments sent to millions of Americans as part of the CARES Act are trickling out now.
- Eviction moratoriums are starting to expire in states, which will allow landlords to remove struggling residential and business tenants.
- Corporate tenants may face increased pressure from landlords given the strong stock market and extreme level of debt taken on by many businesses that will put them in position to take advantage of attractive vacancies.
Where it stands: As in March, the Fed is taking action early, announcing last week it planned to keep U.S. interest rates near zero through 2022 and continue purchases of about $80 billion per month of U.S. Treasuries and $40 billion of mortgage-backed securities.
- Experts predict the Fed's balance sheet could rise to $10 trillion by year-end, up from its current level at just over $7 trillion and more than double where it started the year at under $4.5 trillion.
- The Fed also announced it would start buying individual corporate bonds through its Secondary Market Corporate Credit Facility in addition to ETFs and opened up its $600 billion Main Street Lending Program on Monday.
Why you'll hear about this again: U.S. economic analysts at Goldman Sachs expect Congress to "enact another $1.5 trillion (7% of GDP) in fiscal measures" in addition to the estimated $3.5 trillion so far. But some are starting to worry that lawmakers in Washington D.C. won't do their part.
- "We see risks of implementation and policy exhaustion," strategists at the BlackRock Investment Institute said in a recent note to clients.
- "Next rounds of U.S. fiscal stimulus look harder to achieve because of a return of political polarization after a short window of bipartisanship."
What they're saying: National Economic Council director Larry Kudlow said in an interview with CNN that the White House wants the additional $600 per week in unemployment pay to end next month.
- President Trump is considering a “panoply of ideas” for new economic stimulus that would be worked on after the July Congressional recess period, Kudlow added.