Lawmakers have reached an agreement on a roughly $900 billion coronavirus stimulus package, setting the table for voting on that and a broader spending bill Monday, WSJ reports.
Why It Matters: After months of gridlock, the bipartisan breakthrough brings Congress to the verge of providing a “fresh infusion of aid to households, small businesses and schools.” It’s a much needed follow up to the $3 trillion stimulus passed in the spring. A new deal remained in doubt as Republicans and Democrats struggled to find common ground, with talks breaking down at several points.
The Situation Was Dire: “The rapid spread of the virus this fall, signs of a slowing economic recovery, a government funding deadline and the looming expiration of several existing aid measures pushed lawmakers to reach a deal before Congress takes a holiday break.”
The Key Details:
- The package is expected to give many Americans a $600 direct check.
- It will also provide $300 per week in advanced unemployment benefits, as well as “aid for schools, vaccine distribution and small businesses.”
The stimulus is tied to a larger annual spending initiative of around $1.4 trillion and almost fell victim to deadlines. Congress kept talks alive with a 24-hour extension of government funding Sunday evening.
The Takeaway: Congress will vote on the agreement and broader spending agreement Monday. As of Sunday afternoon, Senate Majority Leader Mitch McConnell said all outstanding issues were settled but stressed the importance of getting the deal over the finish line by saying, “Now we need to promptly finalize text, avoid any last-minute obstacles and cooperate to move this legislation through both chambers.”
The market clearly did not like this slimmer stimulus bill. The direct economic support is half of what was provided from the CARES act and the reduction will put pressure on families that are without jobs because of the virus.
I am wary about a stock market correction if we see material weakening in consumer spending and a prolonged pandemic. I also strongly believe that many “stay at home” companies will continue their momentum into 2021 because it seems unlikely the pandemic will end at the snap of a finger.