A bipartisan commitment is under way for fiscal stimulus legislation to protect American workers and households affected financially by the coronavirus, Treasury Secretary Steven Mnuchin said on Friday. “This will be an entire government effort,” he told CNBC.
While House Speaker Nancy Pelosi, D-Calif., vowed to pass a coronavirus relief bill Friday, she said negotiations with Mnuchin were still ongoing.
The sooner the better, analysts say.
“Americans are basically saying, look, you’ve got to give us something by Monday,” said Sam Stovall, chief investment strategist at CFRA Research.
“This is really more of a confidence issue. It’s a crisis in confidence, not only confidence that we can avoid the virus, but confidence in our own leadership. Those on Wall Street and Main Street were sorely disappointed by President Donald Trump's [Wednesday night address] because he was more dismissive than decisive,” Stovall said.
“I think this is a good first step in the right direction,” said Mark Hamrick, senior economic analyst at Bankrate.com. “I think markets have been agitated, and to some degree undermined, by the perception of a slow federal response to the outbreak.”
Policymakers have a few things to consider, experts said. The U.S. economy is largely service-based, and both business activity and the labor market are anchored by small businesses. Combined with an economy that is largely driven by consumer spending, measures that give people the means to continue buying, selling and keeping workers on the books will have the most impact on the real economy.
“They need to get it right, or as correct as possible, early. Bad policy is not going to help,” Hamrick said. “As with the battle against the virus itself, this is a battle for the economy and the markets.”
A payroll tax cut or industry-specific bailouts would likely be less effective than other measures that are reportedly part of the package being developed.
Specifically, Hamrick said, the prospect of a payroll tax cut or industry-specific bailouts would be less effective for the cost than other measures that are reportedly part of the package being developed.
“Given how quickly all of this is unfolding, at the top of the list is the problem of eliminating the cost of coronavirus testing,” he said. “The last thing we want to do is have a situation where people are not getting tested.”
The second big issue is ensuring that workers, especially hourly employees who don’t get paid sick days, don’t have to come to work while ill — and risk infecting others — or lose days’ or weeks’ worth of pay, said Andrew Challenger, vice president at executive outplacement and coaching firm Challenger, Gray & Christmas.
“I hope to see the bill address emergency sick leave. Most Americans cannot perform their jobs remotely and symptomatic workers need to feel financially secure enough to stay home,” he said. "Injecting money into preventative measures like extending paid family leave will have the biggest impact on confidence.”
As office workers are asked to telecommute, and sports, entertainment and other events are canceled across the country, analysts said it’s realistic to assume that the virus pandemic will damage the economy — although where and how is still largely a matter of guesswork.
“There’s going to be some spending that simply is not going to occur. If you think about how many public events are not being held in the near term that’s a massive consideration. I don't think there's a solution for that,” Hamrick said.
As a result, experts said expanded access to and availability of unemployment insurance also remains a top priority.
“It would be wonderful to see the bill address applying for unemployment insurance online,” Challenger said. “I have heard that some unemployment offices around the country require in-person application. In scenarios where strict social distancing measures are adopted this will disrupt the benefit,” he pointed out.
“For hourly workers, it's reasonable to assume they’ve already begun to feel some economic pain in this situation, meaning they've lost income. This is a way of trying to keep them afloat,” Hamrick said.