Please ensure Javascript is enabled for purposes of website accessibility

Goldman Sachs Predicts Another $1 Trillion in Federal Fiscal Aid Is Coming

By Bram Berkowitz - Apr 30, 2020 at 1:55PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

That level of intervention would likely be welcomed by the nation's banks.

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 (GS 0.84%), another $1 trillion could be coming out of Washington in the next two fiscal years.


Image Source: Getty

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.


Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
$334.67 (0.84%) $2.80

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.