The first link is to an appearance ~15 minutes after President Trump’s fiscal stimulus tweet yesterday afternoon. We did not expect a pre-election deal, the two parties were quite far apart on the core strategy of fiscal stimulus. Please have a look at the 10 minute video of my interview with Catherine Murray from BNN/Bloomberg in Toronto. This was not broadcast in the US. My market conclusion was that most investors, political strategists and our own analysis did not believe there would be a pre-election deal, consequently, the market was likely to rebound quickly.
Democrats want expanded unemployment insurance, Republicans want to expand EITC (earned income tax credit). This is a demand vs. supply-side debate.
Transfers to state and local governments. As we discussed in last week’s note, large transfers facilitate policymakers not facing the inevitable health policy tradeoffs as illustrated by California’s 16.1% insured unemployment rate relative to Florida’s 4.3% rate.
PPP loans. The last tranche was not fully taken up, small business doesn’t need more loans, they need more flexibility in forgiveness for the initial loans and removal of lockdowns and restrictions i.e. 25% restaurant capacity in NYC.
This note is available to everyone, if you are not a paid subscriber please consider becoming one. There was a detailed discussion of the fiscal outlook in last week’s note (link below).
Barry C. Knapp
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Ironsides Macroeconomics LLC
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