Stimulus checks have helped the markets and economy. Further stimulus seems likely, but may take a different form.
Stimulus checks are one reason the markets have held up better than expected during the current crisis. However, these one-off checks are mostly spent and other programs are tapering off or expiring over the coming months. What’s coming next will inform the trajectory for markets over the coming weeks. More stimulus is likely, stimulus checks are not a given at this point.
It seems likely more stimulus is coming. The House passed the HEROES Act, though it is not law yet. That would offer, if it becomes law, significantly more stimulus, including further checks with more generous treatment of younger and older dependents. However, even though the HEROES Act may not make it into law, there appears to be bipartisan support to do more. The Senate leader has stated that we it comes to further stimulus, “We’re taking a careful look at a fourth and final bill”. Even though he’s also indicated that bill likely won’t be the HEROES Act.
After all, unemployment remains, at this point, not just at extraordinarily high levels, but still increasing. The most recent unemployment claims are 10 times the weekly claims we saw at this point last year. The single week of claims from last week also exceed the entire unemployment claims at this point last year. We’re not even close to through this yet, economically speaking, even as reopening starts. We’ve almost become immune to the scale of these unemployment numbers as they roll in each week. Yes, unemployment is a lagging indicator, but these high levels remain extreme.
