Congress has already approved close to $2.7 trillion in fiscal aid to states, businesses, and individuals to cushion the blow of the coronavirus pandemic. And according to a new report from Goldman Sachs (NYSE:GS), another $1 trillion could be coming out of Washington in the next two fiscal years.
As an article on that report in The Fiscal Times notes, the first $2.2 trillion disbursed by Congress earlier this year included $500 billion in aid to struggling companies; nearly $350 billion in small business loans; beefed-up unemployment benefits, and stimulus checks sent directly to tens of millions of Americans, among other benefits.
Then Congress recently added nearly $500 billion more to its allocation, mainly to replenish the coffers of the small business loan program, which ran out of money after just two weeks.
Many banks noted in their first-quarter earnings reports that the impact of the federal government's fiscal intervention was a big unknown in their modeling. Would it be enough to bridge people back to employment -- and therefore help them once again make their loan payments -- or was it just pushing defaults further down the line?
After all, no one really knows how long it will be before the social distancing measures that have slammed the brakes on a significant fraction of the nation's economic activity.
"Since we still expect Congress to provide fiscal aid to states, extend unemployment benefits, and potentially do a number of other things, we are increasing the amount of fiscal support we assume in our forecast," Goldman economist Alec Phillips wrote.
According to Phillips, enhanced unemployment benefits Congress provided through July are projected to be extended through the end of the year, but cut in half from $600 per week to $300.
Goldman also expects another round of direct stimulus payments to individuals, a modest boost of about $100 billion to infrastructure spending and about $200 billion in additional aid to fiscally strapped states.