US President Donald Trump’s call for an end to stimulus negotiations on a new stimulus bill presents a new wrinkle in the story of the country’s economic recovery from the deep financial fissures of the ongoing coronavirus pandemic. The stimulus package was expected to include a second stimulus check and renew enhanced unemployment benefits. Without it, many of those hit hardest by the recession may not get any kind of financial relief until at least 2021. How that might affect the US’s already precarious recovery remains to be seen.
Until now, economic bounce back has been, so far, a mixed bag, with stark divisions along socioeconomic lines. Case in point: although the stock market and average US household wealth are both at near-record highs, the US may soon face a food bank meal shortage with potentially catastrophic repercussions for the nation’s record-setting 22.3 million adults that don’t have a reliable source of food. Over 12% of these households include children, according to US Census data.
What’s causing this K-shaped recovery in which well-educated, so-called white-collar professionals and the industries that cater to them are thriving while working class people struggle? In short, coronavirus prevention measures, aka, lockdown. While office workers have been able to either transition to working from home or they’ve returned to the office with new safety precautions in place, people whose income is tied to public life, like restaurant and hotel employees, remain largely unemployed or underemployed.
Many of the protections put in place early in the pandemic, such as the $600 federal unemployment enhancement and the Paycheck Protection Program, have long dried up, despite nearly twice as many US workers still being out of work compared to pre-pandemic numbers, according to the US Labor Department (PDF).
So, what does the road to economic recovery look like from here? We’ve put together the latest news about the coronavirus recession, where to find help, what makes a recession and the government’s response. This story is intended as an overview, not financial advice. It updates as the situation develops.
Latest coronavirus recession news
- Trump unexpectedly and abruptly ended negotiations on a second stimulus bill Oct. 6 in a series of tweets that said, in part, “I have instructed my representatives to stop negotiating until after the election.”
- Stimulus is needed, stressed Chairman of the Federal Reserve Jerome Powell, hours before Trump’s tweets. “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses.”
- Economic recovery is coming to the US faster than the rest of the world, according to S&P data showing US output likely to drop by just over half the rate of other countries. By other measures, the recession continues.
- Office rents are tumbling across the country, as companies have moved to a predominantly remote workforce, with San Francisco experiencing the steepest declines.
- Housing prices continue to skyrocket in perhaps the most unexpected repercussion of the “COVID economy,” with experts predicting another six to 12 months of ramping prices before supply and demand balance out again.
Where to find additional personal finance resources
If you’ve experienced financial hardship as a result of the coronavirus recession, here are some tools to help you regain your financial balance.
When will the COVID recession end?
From an economist’s point of view, a recession ends when certain market requirements are met, which some estimate may happen about midway through 2021. From a personal point of view, you might wonder most about your ability to work, pay your bills and secure your financial future.
Economists and health experts agree that the economy won’t fully recover until the coronavirus pandemic is contained — without triggering another wave of infections when lockdown measures are released. That’ll happen either through herd immunity, an effective treatment for COVID-19
, a coronavirus vaccine or some combination of all three.
Several vaccine candidates have shown promise in human trials. Even so, most people won’t receive one until sometime next year.
How the government has tried to prop up the economy
The $2 trillion stimulus package passed as part of the CARES Act in March represents the US government’s first attempt at thwarting a recession. The economic relief law included stimulus payments of up to $1,200 for most US taxpayers, as well as a loan program for businesses to keep paying their employees.
So far, efforts to pass another stimulus package have stalled, with most analysts’ hope for a deal prior to the November election dwindling by the day.
The Federal Reserve, however, has indicated it will continue to hold interest rates close to 0% until 2023, which often has the effect of encouraging more borrowing, which leads to more spending — and more spending generally improves the economy.
How can I help others?
It’s easy to feel helpless, but if you’re feeling financially secure or have time to give, there are ways to make a difference. My CNET colleague Katie Conner has some excellent recommendations for things you can do to help your local community and businesses, including no-cost contributions like online volunteering or donating blood, as well as ordering take-out or delivery, and buying restaurant gift cards.
Other local businesses like bookstores, gardening centers, toy shops and boutiques may have a website where you can support them with a curbside order.
The best advice I’ve heard so far about how you can individually help prop up the economy is this: Spend to the best of your ability and within your means.