April 3, 2020

Historic Spending Seems Likely to Repeat Itself

The $2 trillion coronavirus legislation approved by Congress last week is the largest relief package in U.S. history, but history could quickly repeat itself. The pressures coming to bear on Congress and the President could make another $2 trillion bill in May likely. The size and speed of new relief will be determined by the pace of the continued coronavirus spread and the economic downturn as Congress begins considering its next response later this month. For now, it appears both are likely to spiral downward. If these trends continue into May, the daily deluge of negative news on television screens across America will likely eventually overcome both the differences between President Trump and Democrats and internal Republican opposition to another multitrillion-dollar package. The next phase may take longer to produce, given the substantive differences between the parties are great and getting more so. But the pressures each side will face in late April when Congress is scheduled to return could be greater than what compelled them to produce the first three relief bills in three weeks. These conditions could spur both parties to reach agreement on another piece of significant legislation as soon as mid-to-late May.

Infrastructure Proposals May Need to Scale Back

While it seems very possible some infrastructure funding will be part of the next package amid bipartisan calls, it seems hard to reach the $1 trillion to $2 trillion proposed by House Speaker Nancy Pelosi and President Trump. Meeting basic needs for the health care systems, workers, and businesses could cost close to the more than $2 trillion from the last relief bill. Adding another trillion dollar or more infrastructure package on top of that pile seems unlikely, and negotiations over that spending could risk holding up more essential items. Expect infrastructure spending to be closer to $100 billion to $200 billion if included in the next bill.

Pressure Will Increase on Political Leaders to Address Economic Decline

While the U.S. death toll and infection rate from COVID-19 continues to climb, the picture on the economic side is not much brighter. Signs increasingly point to an ugly second quarter, with forecasts showing a double digit drop in economic growth and tens of millions more Americans unemployed. A record 6.6 million people filed initial unemployment claims in the last week of March, shattering the record number set last week, and some estimates for the March and April payroll survey weeks have been as high as 14 to 18 million. Both political parties will be highly motivated to address the issues a declining economy raises for their constituencies, but perhaps no one will be more motivated than President Trump. He understands the importance of the economy to his reelection prospects and can be expected to do what he can in Q2 to halt the economic decline before the start of the critical third quarter.

How Americans are Coping During Quarantine

New data from Crisis Text Line, which offers free crisis counseling via text 24/7, highlights how Americans are coping while self-quarantining. Many people who are reaching out for help are experiencing financial burden due to the crisis, with nearly half reporting reduced work hours. The same number are reporting increased food and medical expenses due to the crisis. Both single people and those living with others are reporting higher levels of anxiety, but anxiousness is more common among those own their own. While they’re at home, respondents’ most common activities are sleep, video games and TV – to little surprise, the Netflix documentary “Tiger King” is one of the top five shows people are watching. Eating junk food is also one of the most popular activities – namely, ice cream, chips, cookies and chocolate.

The Conversation Moves South

Last week, the Twitter conversation was increasingly focused on New York City and the tristate area as it emerged as the epicenter of the coronavirus outbreak in the U.S. But recent days have marked a shift, with more people tweeting about emerging hotspots in the South. On April 2nd, the number of tweets about epicenters in the South (roughly 233K) surpassed the number of tweets about New York City and the tristate area (roughly 203K). News coming out of Georgia was a central driver; trending topics on Twitter included “The South,” “Kemp,” and “Stacey Abrams” as people tweeted concerns about Governor Kemp’s handling of the situation in Georgia. The surge in Twitter activity comes as the amount of COVID-19 cases is quickly growing in the South—and could signal increased pressure on state officials to act decisively to mitigate the virus’ spread moving forward.