Congress likely to ax second round of stimulus checks, according to Goldman Sachs forecast
Maybe you don’t need that second $1,200 stimulus check after all?
At least that’s what more economists and politicians are thinking after better than expected jobs numbers: On Friday we learned the jobless rate dropped from 10.2% in July to 8.4% in August, soundly beating the consensus estimate of 9.8%.
And that strong jobs report is already making it less likely Congress will be as generous with the next economic stimulus package. On Monday, Goldman Sachs forecast the next stimulus package will come in at $1.5 trillion, below its previous forecast of $2 trillion.
Goldman Sachs projects the next stimulus bill will include $400 per week in enhanced unemployment benefits, additional small-business aid, and “modest” state fiscal aid. However, Goldman Sachs researchers foresee no second round of $1,200 stimulus checks.
“There appears to be lukewarm support for another round of payments to individuals, and concerns regarding the overall size of the package could crowd out an additional round of checks,” wrote the Goldman Sachs researchers. “While there is not strong opposition to another round from any of the main parties to the negotiations, it is not the top priority of any group, either.”
Republican and Democratic leaders have struggled for months to come to terms for another broad stimulus package. Republicans are currently offering $1.3 trillion, while Democrats are offering $2.2 trillion.
House Speaker Nancy Pelosi said earlier this month that Democrats refuse to go below $2 trillion. For the Goldman Sachs forecast to become a reality, Democrats would have to walk back on that stance.
And while political support for stimulus checks might be waning, Democratic and Republican leaders have yet to publicly say they’re excluding it from their stimulus request. The second round of stimulus checks would cost around $290 billion—the price tag of the first round of stimulus checks.
For now it appears to be a waiting game: The consensus on Capitol Hill is nothing will get signed before the end of September—when U.S. lawmakers are required to approve more federal funding to stave off a government shutdown.
More must-read finance coverage from Fortune:
- Investors are pouring record amounts into Wall Street’s new favorite “safe haven”
- First he took energy trading and the NYSE electronic. Now Jeff Sprecher of ICE shares his plans to digitize your mortgage
- The bizarre reason Amazon drivers are hanging phones in trees near Whole Foods
- The humbling of Europe’s most-hyped startup incubator: Rocket Internet
- Fortune’s 2020 40 Under 40