White House trade adviser Peter Navarro told reporters at the White House that unless Washington lawmakers bridge their differences and pass another COVID-19 relief package, many Americans face the threat of falling into an economic “chasm.”
Navarro warned on Nov. 25 that urgent action is necessary in the face of slowing economic growth as the previous round of aid runs out and the country faces a second wave of lockdowns amid a resurgence of CCP (Chinese Communist Party) virus cases.
“What I’m worried about is millions of Americans out there who are at risk from falling into this chasm where they don’t have sufficient support, and this is why a Phase 4 program on a bipartisan level is so important,” Navarro said, referring to a relief package.
“I understand that there’s a lot of arguing going on, but at a minimum, what we have to do is hit three points of the compass,” he said. “We’ve got to help small businesses with a top-up of the PPP program; that was very, very successful,” he said, referring to the Paycheck Protection Program that provides forgivable loans designed to provide a direct incentive for small businesses to keep workers on the payroll.
“We can do another round of stimulus for families,” he said, “and in many ways most importantly, we have to extend the pandemic emergency unemployment compensation relief,” set to expire at the end of December.
In separate remarks to Fox News on Nov. 25, Navarro characterized slowing growth and renewed lockdowns as “twin forces” that are going to hit the economy, and “unless Capitol Hill gets its act together and steps into that breach … we’re going to have an issue.”
Talks on another stimulus bill remain stalled, with House Democrats holding fast to their demands for a broader relief package worth around $3 trillion, and Senate Republicans insisting on more targeted measures of around $1 trillion.
Navarro’s remarks come as new daily virus infections have surged in recent weeks to their highest levels yet in the United States.
The resurgent virus has prompted officials in more than a dozen states to tighten curbs on businesses to try to slow infections, including issuing mask mandates, limiting the size of gatherings, restricting restaurant dining, and reducing the hours and capacity of bars and stores.
Buffeted by the accelerating outbreak, America’s economy is facing pressure from persistent layoffs, diminished income, and nervous consumers.
Economic data released Nov. 25 by the Labor Department showed the number of Americans filing for unemployment benefits the previous week increased by around 30,000 to 778,000, the second straight weekly increase and a sign that the viral surge may be forcing more businesses to cut jobs. Prior to the pandemic, weekly jobless filings stood at around 225,000.
A separate report from the Commerce Department indicated that consumer spending rose by just 0.5 percent last month, the weakest rise since the start of the outbreak. Consumer spending is a key driver of the U.S. economy, accounting for around 70 percent of gross domestic product (GDP). The same report also showed that personal income, which fuels consumer spending, fell 0.7 percent in October.
Another looming threat to consumer spending is the impending expiration of the two supplemental federal unemployment programs the day after Christmas, which would end benefits for around 9.1 million unemployed.
Consumer sentiment is also down, with both the Conference Board’s confidence measure and the University of Michigan’s Surveys of Consumers ticking down in November, suggesting that many Americans have become more anxious and uncertain about their financial welfare.
Mark Zandi, chief economist at Moody’s Analytics, warned in a research note that the economy will face mounting headwinds until lawmakers break their impasse and agree on more stimulus.
“The economy is going to be very uncomfortable between now and when we get the next fiscal rescue package,” he said. “If lawmakers can’t get it together, it will be very difficult for the economy to avoid going back into a recession.”