The U.S. economy is officially in a pandemic-driven recession, but don’t expect another coronavirus relief bill until late next month.
The U.S. Senate is in session for the rest of the month, but several top Senate Republicans said Monday that they don’t expect to take up any “phase four” package of pandemic relief until after their two-week-long July 4th recess.
White House wants another relief bill: That July timing jibes with the timeframe laid out by White House economic adviser Larry Kudlow, who said recently that he expects formal bipartisan negotiations for the next bill to start only after the Independence Day weekend. Kevin Hassett, an economic adviser to President Trump, said Tuesday in an interview with The Wall Street Journal that he sees another round of aid before the August recess and that the White House “would definitely support” another package.
“There are a lot of things that really are necessary to make sure that once we open up that we actually lift off,” Hassett said. “The odds of a Phase Four deal is something we talked with the president about last week. We even had a small group meeting this morning to talk about it. The odds of a Phase Four deal are very, very high.”
A next round of relief in late July would also coincide with the expiration of enhanced unemployment benefits providing an additional $600 a week in assistance, which are set to expire July 31.
The GOP’s risky waiting game: As Politico’s Burgess Everett and Marianne LeVine write, the GOP’s lack of urgency on additional coronavirus legislation is essentially a big bet on a strong economic rebound — a bet that, despite last week’s surprisingly strong May jobs report, could still backfire:
“Republicans say it’s only responsible to wait and see how nearly $3 trillion in total coronavirus spending seeps into the economy. But it’s also a gamble: if the economic recovery isn’t as strong as they predict, they risk being blamed by voters in November that they and President Donald Trump didn’t do enough amid a global pandemic and historic recession.”
Senate Minority Leader Chuck Schumer (D-NY) on Monday called on Republicans to pass the next coronavirus package in the weeks ahead, before senators leave for their recess. “I fear that the recent bump in the employment number, caused in large part because of the stimulus money we pumped into the economy, will create in Republicans a sense of complacency and the economy will get even worse,” Schumer said, according to Politico.
The bottom line: The recession may already be over, and the jobs numbers announced Friday likely means that any additional coronavirus relief will be smaller than previously expected, whenever it comes. Chris Krueger of Cowen Washington Research Group on Monday lowered his expectations for the next package from $2 trillion to about $1 trillion.