It’s been clear in the data for a while: The economic recovery is slowing. At the same time, the window for more stimulus to help boost that recovery is narrower than ever.
That decelerating pace was even more evident in the unemployment data released Friday, showing only 245,000 jobs were added in the month of November—dropping the unemployment rate from 6.9% to 6.7%.
The report comes as Congress is making progress on a new $908 billion stimulus bill, this time with bipartisan support. Even House Speaker Nancy Pelosi, who has long pushed for several trillion dollars in aid, has said the the smaller bill is a good jumping off point for further negotiations.
But with the slowing pace of the economic recovery and a winter without a widely-distributed vaccine, some economists are feeling exasperated with Capitol Hill: “C’mon, already!” exclaims Moody’s Analytics chief economist Mark Zandi.
“If we don’t get that help, [Friday’s unemployment] report suggests that the economy is going to start backtracking, we’re going to start losing jobs, and unemployment will start rising again,” Zandi tells Fortune. Without more stimulus, “There’s a pretty good chance this will go down in history as a double-dip recession,” he believes.
Michelle Meyer, head of U.S. economics at Bank of America, is slightly more optimistic: “There’s a clear economic case for the stimulus, but I think it’s important to remember that the economy has continued to recover, has continued to heal,” she tells Fortune. “Another round of stimulus will simply speed up that healing process in a way that could be very powerful for the trajectory of growth once we have the vaccine.”
But what’s on economists’ wishlists for a stimulus bill to bridge the gap between an ailing economy and a vaccine-liberated one?
Top stimulus priorities
For Bank of America’s Meyer, a few things top the list: More funds for testing and a vaccine (“clearly number one,” she says), pandemic unemployment insurance (which includes expanded groups like freelancers and gig workers who are due to lose access next year), and aid for small businesses make up her top three.
In a broader sense, “the first priority is, bottom line, those households who don’t have a job, don’t have any savings,” says Moody’s Zandi.
He agrees that more money for the unemployed, testing, and small businesses is crucial, and that rental assistance, support for transportation like airlines, and state and local funding are also key: “Those are all, I think, things that are necessary to bridge the economy to the other side of the pandemic,” he states.
Liability insurance, a key Republican ask, and state and local funding, a Democrat sticking point, are both good ideas, Zandi says. And Meyer thinks “ultimately to get a bill through, they’re going to have to have a little bit of both.”
To be sure, that all adds up pretty quickly. But the latest bipartisan proposal ticks a lot of those boxes for Zandi and Meyer.
The bipartisan proposal currently includes $180 billion for enhanced unemployment benefits, $288 billion in small business funding, $16 billion for testing and the vaccine, and $25 billion in rental assistance (Plus, some $180 billion for state and local funding).
As a bridge to the other side of the pandemic, “I think they got it right,” says Zandi.
In addition to unemployment and small business support, Zandi argues rental assistance is also a critical component to another deal, especially with eviction moratoriums expiring at the end of the year. “That has a very heightened-level need because either you’re going to have people getting evicted in the middle of winter, in the middle of a raging pandemic, or you’re really sticking it to a lot of mom-and-pop landlords,” he notes. “That’s not that expensive, so, check.”
Certainly the price tag is much lower than the Democrats’ previous $2.2 trillion mark and above Republicans’ $500 billion deal, but economists like Meyer argue roughly $1 trillion of stimulus is “probably appropriate to get us through the next few months.”
‘Blanketed’ stimulus checks aren’t essential
One thing that’s not on Zandi or Meyer’s wishlist? More stimulus checks. The new bipartisan bill notably doesn’t include more $1,200 direct payments, which has already caused a stir among some in Washington, including President-elect Joe Biden and Sen. Bernie Sanders. But economists like Meyers and Zandi argue now more “targeted” support is needed.
“There are very clear differences in how people are faring,” from those who have been able to keep their jobs versus those struggling with unemployment or in hard-hit industries, “so I don’t think we need to have a blanket stimulus check at this point,” Zandi believes.
Whatever the particular line items, a smaller bill looks more likely now (versus the $2.2 trillion or $3 trillion asks from Democrats earlier this fall) because of the time crunch: Congress has until Dec. 11 to pass a spending bill and additional stimulus, and Republicans likely won’t sign a massive deal.
Adds Zandi: “At this point, sooner rather than bigger, is better.”
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