Despite Debt Pressure, Calls for "COVID-19 Stimulus Package Needed" in the US

U.S. Treasury Financial Investigation Office: "No Economic Stimulus, No Household and Business Recovery"
JP Morgan CEO Calls Congress in Political Conflict "Childishly Immature Behavior"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Despite significant debt pressures, as concerns about an economic recession grow again with the resurgence of the novel coronavirus infection (COVID-19), voices calling for additional economic stimulus measures are emerging across the United States. Regarding the deadlock between the Republican and Democratic parties over stimulus agreement amid the presidential election results, some have criticized it as "childish behavior," warning that without stimulus measures, households and businesses could collapse.

According to the New York Times (NYT) and others on the 18th (local time), the U.S. Department of the Treasury’s Office of Financial Research (OFR) emphasized the need for stimulus measures in its annual report submitted to Congress, stating, "Without additional stimulus, many households and businesses will be unable to recover." It added that although large-scale fiscal and monetary policies implemented earlier this year have served as a bridge for economic recovery, macroeconomic risks remain at an "abnormally high level."

The OFR pointed out that unpredictable COVID-19 spread leaves potential uncertainties. It further stated, "Because the virus is new, and due to its transmission routes and related quarantine measures, many businesses are uncertain about when they can resume normal operations and what protective measures they should establish," adding, "Such uncertainties will pose a serious burden on economic activities." The OFR also viewed credit risk as a major concern, noting that large-scale losses from defaults or bankruptcies in some sectors, such as commercial real estate, remain a worry. Although the Federal Reserve (Fed) has worked to stabilize financial markets, concerns about asset quality must also be considered.

In the U.S. Congress, discussions on additional stimulus measures have been ongoing for months, but no agreement has been reached due to disputes over the scale. While the Democratic Party emphasized the need for more than $2 trillion, the Republican Party, led by Senate Majority Leader Mitch McConnell, expressed concerns about debt and advocated for a focused stimulus package of around $500 billion. Since the presidential election held on the 3rd, the leaders of both parties have not even met, only exchanging verbal disputes, causing expectations for an agreement to drop significantly. Experts predict that without a stimulus agreement, 10 million workers will lose unemployment benefits by December.

Voices calling for stimulus measures are also growing louder on Wall Street and in the business community. Jamie Dimon, CEO of JP Morgan, strongly criticized the ongoing failure to reach a stimulus agreement at a conference on the same day, calling it "childish behavior of our politicians." He urged, "Put the kids aside and move forward," adding, "(This behavior by Congress) causes deep and profound frustration among Americans." He continued, "We need to focus on the immediate tasks," and appealed, "Additional stimulus is necessary to overcome COVID-19." Dimon had previously stated that President Donald Trump should concede.

Mark Zandi, Chief Economist at Moody’s Analytics, said, "The concentrated pandemic will pose a serious threat to the fragile economic recovery," especially noting that small and medium-sized enterprises (SMEs) will find it difficult to survive. Doug McMillon, CEO of Walmart, also said on the 16th, "The resurgence of COVID-19 will put further pressure on SMEs already severely impacted by the pandemic," adding, "Elected officials in Washington (Congress members) must cooperate to help SMEs get through the next phase."

This content was produced with the assistance of AI translation services.