Over the last month or so, Democrats and Republicans have been negotiating the next relief package. However, they have failed to reach an agreement so far, increasing the concerns of Americans who are finding it hard to meet their financial needs. A report from Forbes notes that lawmakers may still come up with a second coronavirus relief package and three factors could push them to take action quickly.
Second coronavirus relief package: why Congress needs to act quickly
Both sides have largely remained adamant on their demands for the next relief package. Democrats want a package costing about $3.2 trillion, while Republicans don’t want to give more than $1 trillion. House Speaker Nancy Pelosi has said that they are ready to compromise if Republicans move up by $1 trillion.
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However, no real intent has been shown by either side to reach a deal. But, a Forbes report notes there is a growing need for another relief package and three factors could force Congress to come up with a second coronavirus relief package quickly.
The first factor is the threat of massive layoffs by the airlines. The airline industry has been hit the hardest by the coronavirus pandemic. Though they got $25 billion in aid, it came with the condition that they couldn’t make major staffing changes through September. With the September deadline approaching, several airlines announced that they would have to layoff or furlough thousands of workers in October to stay afloat.
Many believe that these announcements from airlines are partly a tactic to put pressure on the government to come up with another relief package. Even if the announcements are tactics, Congress still needs to take it seriously considering the rise in jobless claims last week.
Recession and dropping consumer confidence
Another factor that could push Congress to take action is the looming threat of a double-dip recession. As per a recent survey of economists by the National Association for Business Economics, about two-thirds believe that the U.S. has not escaped a recession. Further, 80% of economists believe there is a 25% chance of the U.S. slipping into another recession after a brief recovery.
Similar sentiments were echoed by Dennis Lockhart, the Atlanta Fed president from 2007 to 2017. Speaking to CNBC's Squawk Box Asia on Friday, Lockhart said the U.S. may go into a double-dip recession if it is unable to control the coronavirus outbreak and if the lawmakers fail to reach an agreement on the next relief package.
The last factor, as per the Forbes report, is the growing concern among consumers. According to Forbes, consumer spending is a big indicator of the confidence that people have in the economy. Presently, the consumer confidence index is at its lowest in the last six years.
Consumer spending rose in May and June, but it was probably due to the stimulus checks and additional unemployment benefits. The unemployment benefits expired in July and it likely impacted consumer spending as well. A drop was seen in the consumer confidence index in July and August.