To save the economy, the US allocates $4 trillion and $3 thousand per family



To save the economy, the US allocates $4 trillion and $3 thousand per family

In the face of a rapid recession, the United States intends to spend $4 trillion to save the economy and pay $3,000 to each family to support domestic demand, writes FXteam.

The Donald Trump administration, in conjunction with the US Federal Reserve, has prepared an economic support package that, according to Wall Street banks, is already in recession.






The forecasts are disappointing, with Morgan Stanley pointing out that the US GDP has fallen to a record 30% in the second quarter. And even more catastrophic is predicted by James Bullard, president of the Federal Reserve Bank of St. Louis. He expects unemployment to rise by 30% in April-June 2020 and a decline in US GDP by 50%.

The new economy support package



The Donald Trump administration, in conjunction with the US Federal Reserve, has prepared an economic support package that, according to Wall Street banks, is already in a recession and maybe deepest in the last 12 years.

The bailout provides $4 trillion in additional liquidity in the form of tax breaks, business loans, health care financing and direct payments to American families to cover their daily expenses, Fox Finance spokesman Stephen Mnuchin said.

The economic rescue amount is 20% of the GDP of the United States. About half — $2 trillion — will be spent on the budget. 60% of the revenue and 40% of the equivalent share of the budget are provided to cover the announced measures.

“President Trump has strongly advocated the protection of American workers. The first part (aid plan) provides for preferential lending to increase the resilience of small businesses. If you are a small entrepreneur, you will receive two weeks of cash flow to pay your employees, ” the Finance Minister said.





According to Stephen Mnuchin, the program, which will also include writing off part of the loans and paying corporate overhead costs, will allow “small and large businesses to last for 90-120 days.”

To those who lost their jobs due to the outbreak and spread of coronavirus infection and subsequent quarantine, the authorities will provide extended assistance, which is estimated to cost $250 billion.

According to an estimate by Bank of America, last week, there were about 3 million unemployment claims for the US Department of Labor, four times the historic high during the 1982 recession.

There are also direct payments in the form of checks or deposits for households. “A family of four will receive an average check of $3,000 to help them stay,” Mnuchin said.

About $110 billion will be given to hospitals affected by the influx of patients. “We want to be sure that the hospital is fully funded,” the minister said, adding that the final amount is still in the process of discussion and approval.





The support package is designed for 10-12 weeks. The approval of the bill is expected to be completed on Sunday and will receive congressional approval on Monday.

According to Johns Hopkins University, more than 26.7 thousand cases of coronavirus infection have been reported per week in the United States. At least 340 people have died.

More than half of all cases, more than 12,000, are in New York State. It is followed by Washington and California. Almost 1.8 thousand and about 1.5 thousand cases are registered respectively.

It is worth noting, according to Morgan Stanley, in the second quarter of US GDP drops to a record 30% in history.

Fed forecast



Even more catastrophic than Morgan Stanley, predicts James Bullard, president of the Federal Reserve Bank of St. Louis.

Federal Reserve Chairman of the Federal Reserve (FRS) St. Louis James Bullard predicted that in the second quarter of 2020, the US unemployment rate could rise to 30% (currently about 3%) due to the closure of businesses and downtime.

He also predicted an unprecedented 50% fall in the country's GDP against the backdrop of the Covid-19 outbreak, according to the US Jobless Rate May Soar to 30%, Fed's Bullard Says on Bloomberg.

During the period of the strongest volatility in the market, the latter can only help a competent fiscal policy of the state, says Bullard: To compensate for the under-income during this time in the amount of $2.5 trillion will be possible only on condition of strong recovery of the American economy. The Fed's role in this situation is to make every possible effort to keep the markets afloat.

In an interview with Bloomberg, Bullard emphasized the urgent need for coordinated action between Congress and the White House on a stimulus package. The Fed has already implemented securities and money market assistance programs, cutting interest rates to near zero, promising to increase treasury bond investments by at least $500 billion and mortgage securities by $200 billion.

Supporting Fed Markets



Even more catastrophic than Morgan Stanley, predicts James Bullard, president of the Federal Reserve Bank of St. Louis.

Federal Reserve Chairman of the Federal Reserve (FRS) St. Louis James Bullard predicted that in the second quarter of 2020, the US unemployment rate could rise to 30% (currently about 3%) due to the closure of businesses and downtime.

He also predicted an unprecedented 50% fall in the country's GDP against the backdrop of the Covid-19 outbreak, according to the US Jobless Rate May Soar to 30%, Fed's Bullard Says on Bloomberg.

Read also: Quarantine in the USA may lead to an economic recession that had no analogs in history


During the period of the strongest volatility in the market, the latter can only help a competent fiscal policy of the state, says Bullard: To compensate for the under-income during this time in the amount of $ 2.5 trillion will be possible only on condition of strong recovery of the American economy. The Fed's role in this situation is to make every possible effort to keep the markets afloat.

In an interview with Bloomberg, Bullard emphasized the urgent need for coordinated action between Congress and the White House on a stimulus package. The Fed has already implemented securities and money market assistance programs, cutting interest rates to near zero, promising to increase treasury bond investments by at least $ 500 billion and mortgage securities by $ 200 billion.

Supporting Fed Markets



The United States Federal Reserve today announced a number of programs aimed at providing immediate assistance to the market for its functioning in the context of a coronavirus epidemic, according to a CNBC report.

In order to assist businesses that will help keep themselves “in the loop,” the US Federal Reserve's monetary policy instruments are envisaged as continuing to purchase assets “to the extent necessary to maintain the smooth functioning of the market and ensure an effective monetary policy transfer mechanism under broader financial and economic conditions”.

Read also: The US economy has officially entered a recession


The Fed's key giants of US business have provided $ 300bn in loans and the formation of a fixed-term lending facility — a measure the regulator has resorted to solely during the financial crisis.

New measures include partial support for corporate and municipal bond markets. The US Federal Reserve has promised that treasury and mortgage bonds will be virtually unlimited. Last week, the Federal Reserve announced plans for the first phase of the $500 billion purchase of securities and the second for $200 billion. The Fed is planning to buy $375 billion and $250 billion respectively this week.

The Federal Reserve's statement states that its priority is to care for victims and companies and to limit the further spread of the coronavirus: “Despite the existence of a significant level of uncertainty, it is now clear that our economy will face severe shocks. Serious efforts must be made in the public and private sectors to minimize job losses and income and to facilitate rapid economic recovery after the crisis. “

Recall, as noted earlier, the previous size of the assistance package that the US Administration has developed over the last two weeks is $1 trillion, according to a CNN report.

A substantial amount of assistance is provided for direct payments to ordinary citizens. The details, according to Treasury Secretary Steven Mnuchin, are now being agreed, and the amount could be about $1,000 per US citizen.





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