Increasing Global Economic Collapse; The US economy could fall off a fiscal cliff
By Paul R. La Monica, CNN Business Updated 2:16 PM ET, Mon July 27, 2020
New York (CNN Business) The economy is once again teetering on the edge of a so-called fiscal cliff. Investors don’t seem to care.
Yet as July 31 approaches, there are growing concerns that Congress will only pass a watered down fiscal stimulus package — one that does not include an extension of the $600 in unemployment benefits that many Americans have come to rely on during the Covid-19 outbreak.
This has brought back memories of the last time the US was brought to the edge of a fiscal cliff back at the end of 2012. At that time, worries about the looming expiration of tax cuts and automatic spending decreases by the federal government rattled investors. A crisis was averted after President Obama signed off on a deal reached by Congress just after New Year’s Day of 2013.
The 2020 fiscal cliff is different. More fiscal stimulus is almost certainly coming soon from Washington.
But the estimated $1 trillion that Senate Republicans are said to be proposing pales in comparison to the $2 trillion in benefits already approved by Congress and signed by President Trump in March as part of the CARES Act.
It’s also significantly lower than the more than $3 trillion in aid that Democrats in the House approved in May but likely has no chance of being approved by the GOP-controlled Senate.
More spending may be necessary
So are investors overlooking the possibility of a deeper slump down the road if Congress doesn’t come to the rescue?
Economists are currently predicting a 35% annualized contraction in the US economy for the second quarter. That data will be released Thursday. The hope is that will be the worst quarter of this coronavirus-induced recession. But what if it isn’t?
Some experts warn that consumer spending could dry up if there isn’t a sufficient level of new stimulus.
“Sectors that are heavily dependent on consumer health — retailers, travel, homebuilders, real estate — could be especially sensitive to negative headlines” about the fiscal cliff, said Lindsey Bell, chief investment strategist with Ally Invest, in a report last week.
Bell added that “Congress’ decision on a new wave of support could make or break the next leg of the economic recovery” and that “pulling or reducing fiscal support could lead to a deterioration in the economic improvement recently recorded.”
The Fed coming to the rescue again?
Still, some fear that Washington hasn’t done enough to help lift the economy.
“The delegation of addressing the pandemic to the states, and what can fairly be described as the abdication of any responsibility for the pandemic on the part of the federal government, have contributed to a debilitating sense of policy uncertainty that is dampening economic activity,” said Joseph Brusuelas, chief economist with RSM US LLP, in a report earlier this month.
Brusuelas argued that “absent help from the federal government, the states are heading for a fiscal cliff.”
But even if Congress and the White House don’t step up, there still could be even more stimulus from another corner of Washington. Bell noted that the market has been able to keep rallying — despite fiscal cliff concerns — “thanks in most part to unwavering support from the Fed.”
The Federal Reserve has already slashed interest rates to zero and launched trillions of dollars in lending programs.
The market continues to believe that the Fed can (and will) do even more if necessary. Fed chair Jerome Powell is likely to be asked about the possibility of more stimulus at a press conference on Wednesday.
“The Fed will keep its foot on the gas. It is all in and fully vested,” said Noel Dixon, global macro strategist with State Street Global Markets, in an interview with CNN Business.
Still, the Fed can only go so far. Dixon conceded that much of its efforts are doing a better job of propping up the stock market than helping average consumers on Main Street.
“The Fed has also helped cause the disconnect between Wall Street and the real economy. You will need more fiscal support as well,” Dixon said.
In His Service,
Night Watchman Ministries
Make Your Decision for Christ NOW!!!!!!! Time is Up!!!!!!!
Jesus Christ’s Offer of Salvation:
The ABCs of Salvation through Jesus Christ (the Lamb)
A. Admit/Acknowledge/Accept that you are sinner. Ask God’s forgiveness and repent of your sins.
. . . “For all have sinned, and come short of the glory of God.” (Romans 3:23).
. . . “As it is written, There is none righteous, no, not one.” (Romans 3:10).
. . . “If we say that we have no sin, we deceive ourselves, and the truth is not in us.” (1 John 1:8).
B. Believe Jesus is Lord. Believe that Jesus Christ is who He claimed to be; that He was both fully God and fully man and that we are saved through His death, burial, and resurrection. Put your trust in Him as your only hope of salvation. Become a son or daughter of God by receiving Christ.
. . . “That whosoever believeth in him should not perish, but have eternal life. For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life. For God sent not his son into the world to condemn the world; but that the world through him might be saved. (John 3:15-17). For whosoever shall call upon the name of the Lord shall be saved.” (Romans 10:13).
C. Call upon His name, Confess with your heart and with your lips that Jesus is your Lord and Savior.
. . . “That if thou shalt confess with thy mouth the Lord Jesus, and shalt believe in thine heart that God hath raised him from the dead, thou shalt be saved. For with the heart man believeth unto righteousness; and with the mouth confession is made unto salvation.” (Romans 10:9-10).
. . . “If we say that we have no sin, we deceive ourselves, and the truth is not in us. If we confess our sins, he is faithful and just to forgive us our sins, and to cleanse us from all unrighteousness. If we say that we have not sinned, we make him a liar, and his word is not in us.” (John 1:8-10).
. . . “And he is the propitiation for our sins: and not for ours only, but also for the sins of the whole world. (John 2:2).
. . . “In this was manifested the love of god toward us, because that God sent his only begotten Son into the world, that we might live through him. And we have seen and do testify that the Father sent the Son to be the Saviour of the world. Whosoever shall confess that Jesus is the Son of God, God dwelleth in him, and he in God.” (1 John 4:9, 14-15).
. . . “But God commendeth his love toward us, in that, while we were yet sinners, Christ died for us. Much more then, being now justified by his blood, we shall be saved from wrath through him. For if, when we were enemies, we were reconciled to God by the death of his Son, much more, being reconciled, we shall be saved by his life.” (Romans 5:8-10).
. . . “For the wages of sin is death; but the gift of God is eternal life through Jesus Christ our Lord.” (Romans 6:23).
. . . “Jesus saith unto them, I am the way, the truth, and the life, no man cometh unto the Father, but by me.” (John 14:6).
. . . “For I am not ashamed of the gospel of Christ: for it is the power of God unto salvation to everyone that believeth.” (Romans 1:16).
. . . “Neither is there salvation in any other: for there is none other name under heaven given among men, whereby we must be saved.” (Acts: 4:12).
. . . “Who will have all men to be saved, and to come unto the knowledge of the truth for there is one God, and one mediator between God and men, the man Christ Jesus.” (1 Timothy 2:4-6).
. . . “For God did not appoint us to suffer wrath but to receive salvation through our Lord Jesus Christ.” (1 Thessalonians 5:9).
. . . “But as many as received him, to them gave the power to become the sons of God, even to them that believe on his name.” (John 1:12).
True Church / Bride of Christ Spared from God’s Wrath:
Romans 5:8-10. “But God commendeth his love toward us, in that, while we were yet sinners, Christ died for us. Much more then, being now justified by his blood, we shall be saved from wrath through him. For if, when we were enemies, we were reconciled to God by the death of his Son, much more, being reconciled, we shall be saved by his life.”
Romans 12:19. Dearly beloved, avenge not yourselves, but rather give place unto wrath: for it is written, Vengeance is mine; I will repay, saith the Lord.
1 Thessalonians 1:10. And to wait for his Son from heaven, whom he raised from the dead, even Jesus, which delivered us from the wrath to come.
1 Thessalonians 5:9. For God hath not appointed us to wrath, but to obtain salvation by our Lord Jesus Christ,
Romans 8:35. Who shall separate us from the love of Christ? shall tribulation, or distress, or persecution, or famine, or nakedness, or peril, or sword?
Jeremiah 30:7. Alas! for that day is great, so that none is like it: it is even the time of Jacob’s trouble, but he shall be saved out of it.
Revelation 3:10 Because thou hast kept the word of my patience, I also will keep thee from the hour of temptation, which shall come upon all the world, to try them that dwell upon the earth.
Categories: Economic Collapse