The High Cost of Doing Nothing

Written by SK Ashby

There was little to no possibility that Republicans in Congress would agree to pass any meaningful stimulus measures before the end of the year and now with Republicans using what time they have left to rush the confirmation of the Supreme Court nominee, stimulus is a very dead horse.

Republicans have balked the cost and say it's not necessary, but doing nothing will cost even more than a stimulus package.

Assuming there will be no stimulus between now and the next session of Congress in January, Bloomberg's economists estimate it will take an enormous bite out of economic activity.

After four rounds of U.S. aid totaling nearly $3 trillion, fiscal stimulus is running out: Bloomberg Economics’ analysis shows that under a no-stimulus baseline scenario through year-end, total income flowing to households will transition from unprecedentedly strong for a recession, to just so-so. That in itself would be enough to subtract 5 percentage points from fourth-quarter gross domestic product compared with a counterfactual scenario that includes an extension of stimulus measures. Funding problems for states and small businesses are poised to add to the drag.

Because the economy shrank so much during the second quarter, 5 percent is not as big of a number as it would be in normal times and you have to look at it in reverse, figuratively speaking, but it's still an enormous amount of economic activity that will simply never happen.

Consumption by average Americans is the primary driver of our economy and consumer spending will be nowhere near what it could be without additional stimulus. Average people are not the ones buying up stocks or second homes during the middle of a recession and pandemic.

All of this is going to catch up to us at some point and that point is probably going to be February if not sooner.

I've said this before, but you'd have to be at least slightly crazy to want the job of governing this country even during the best of times.