If you want to shut down an economy to fight a pandemic without driving millions of people and businesses into bankruptcy, you need the government to cut some checks. The coronavirus response deal that congressional leaders struck early Wednesday will get a lot of checks in the mail, but theyll soothe only a few months of financial pain.
The legislation, which is expected to be enacted within days, is the biggest fiscal stimulus package in modern American history, and more than double the size of the roughly $800 billion stimulus package that Congress passed in 2009 to ease the Great Recession.
Among the items in the bill are:
$350 billion in loans for small businesses to help bridge their expenses for up to 10 weeks. Firms would not need to repay up to eight weeks of the loans if they refrain from laying off employees, or move by June to rehire workers they have already laid off. Supporters of the measure say those loans, if rapidly deployed, could help thousands of firms survive, at least temporarily.
$500 billion in aid to airlines and other large corporations that have been hurt by the cratering of consumer demand amid the crisis. Much of the money would be used to backstop loans and other assistance that the Federal Reserve said it plans to extend to companies.
A $1,200 payment for each adult, and $500 per child, in households that earn up to $75,000 per year for individuals or $150,000 for couples. The assistance phases out for people who earn more.
Economists hailed the emerging agreement as a good start, one that works on multiple fronts to keep money flowing through the parts of the economy that have been suddenly rendered inactive. But some warned that it may not actually be large enough, given the enormous economic challenge the United States faces today.
Much of the small business community is facing an extinction-level event, said John Lettieri, the chief of the Economic Innovation Group think tank in Washington, who pushed heavily for a package of small business loans in the agreement. Will this bill help? Absolutely. But the lending capacity needed to prevent mass closures and layoffs could be four or five times larger than what is being provided.
Trading on Wall Street was volatile on Wednesday, as investors started sizing up a $2 trillion coronavirus rescue package designed to shore up the American economy.
After an early climb, the S&P 500 gave up those gains and was lower by midmorning. Trading in Europe followed a similar pattern, with major benchmarks there well off their highs.
Early gains in shares of companies expected benefit from government help like Boeing, American Airlines and Carnival Corp. were also off their highest levels of the day. Boeing was still up 15 percent, however, helping to bolster the Dow Jones industrial average.
On Tuesday, stocks on Wall Street had their best day since 2008 on expectations of the stimulus deal. Democratic and Republican leaders in the Senate finally came to agreement in the early hours of the day Wednesday.
Lawmakers and their aides were still finishing the massive legislation that would enact the countrys biggest emergency spending plan ever, so only the broad outlines were known. The Senate was expected to vote Wednesday.
Governments elsewhere are also laying out plans to help. On Monday, Germany prepared an emergency budget and rescue fund for companies that includes state-supported loans. European Union leaders are working on additional measures to help loosen up money for some countries to help soften the economic blow of the virus.
Though investors have welcomed the plans, few are willing to conclusively say that the worst of the market sell-off is over.
In the United States, widespread social distancing measures put in place to control the spread of the coronavirus have hammered consumer spending, the heart of the American economy. Economists are expecting almost unthinkable declines in the gross domestic product in the second quarter. Analysts at Capital Economics said on Wednesday that they now expect U.S. growth to fall 40 percent in the second quarter at an annualized pace, as the unemployment rate jumps to 12 percent, higher than its 10 percent peak in 2009.
Markets have been volatile in recent weeks, seesawing on sentiment that has veered between hope that governments around the world will take strong measures to stem economic losses from the spread of the coronavirus, and fear that policymakers are not making bold enough decisions.
Encouragingly, recent new lows in stocks have been accompanied by either sideways or even lower volatility, indicating markets are starting to become more comfortable with the potential range of outcomes we face, Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note to investors.
On Monday morning, American Airlines Flight 1 departed John F. Kennedy Airport in New York, bound for Los Angeles. It had six passengers.
The flight is normally one of the airlines busiest and most profitable. Now it is a money pit, a cross-country symbol of how thoroughly the coronavirus pandemic has decimated commercial air travel in a matter of weeks.
This is scary, said Jos Freig, Americans head of Latin America operations, who is managing the companys coronavirus response team. Its difficult to find a bottom on this one.
Dozens of American companies expect to resume normal operations in China by the end of April and keep their investment plans, a survey by the American Chamber of Commerce found.
While the pandemic has continued to cripple economies around the world, the Chinese authorities have started to revive production and ease their lockdown on Hubei Province, where the coronavirus first appeared. Last Thursday, China reported no new local infections for the first time since the outbreak began late last year.
After surveying nearly 120 firms, the chambers China branch said on Wednesday that some companies also planned to maintain investments they had previously set in motion, even as half the firms reported significant drops in revenue and others were pessimistic about economic growth amid the pandemic.
But reports have claimed that health officials in Wuhan, Hubeis capital, are not publicizing the number of people with asymptomatic infections, raising fears that the virus is still spreading. Cases are also climbing among people arriving in the country from abroad, threatening to start a second wave of infections.
But inevitably, with homes and workplaces merging into one, the boundaries between personal and professional lives are eroding and awkward situations have ensued.
By now, you may have had a few video calls with colleagues who took meetings in odd places, like their bathroom or closet, to avoid their children. Then there are the colleagues who surrender their boundaries entirely and let their children and pets be a part of the meeting.
We all get it: No one was really prepared for this transition, and there are limits to what we can all do. But now feels like an opportunity to bring up how to be kinder to your co-workers in workplace video calls, since theyre the ones the calls are really for in the end.
Where did President Trump get the idea about the economy being opened up and just raring to go by Easter? Todays DealBook newsletter puts the pieces together.
Wall Street executives have been warning the president about the financial effects of a prolonged shutdown.
A pivotal moment in this campaign came on a call yesterday with the likes of Paul Tudor Jones, Steve Schwarzman of Blackstone, Dan Loeb of Third Point and Ken Griffin of Citadel, who told the president and vice president that the markets were eager to hear about a plan for reviving the economy. Later in the day, the president went on Fox News and put a date on it.
Reporting was contributed by Jim Tankersley, Alexandra Stevenson, David Gelles, Brian X. Chen, Elaine Yu, Daniel Victor, Jason Karaian, Kevin Granville and Carlos Tejada.