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White House ‘desperate’ to make a stimulus deal as layoffs increase

October 15, 2020, 5:39 PM UTC

Amid the back and forth over a new stimulus deal, nearly 900,000 Americans filed initial jobless claims last week.

“It feels persistently disappointing in the sense that the economy, while having made some progress, isn’t where I think anyone wants it to be,” Bankrate.com’s senior economic analyst Mark Hamrick tells Fortune. “We were sort of bracing for a disheartening transition from summer to fall, and here we are.”

Unemployment claims, which shot up to record levels in April, have leveled off but still remain much higher than before the onset of the pandemic:

State unemployment offices received 898,000 benefit claims the week ending Oct. 10, up from 845,000 the week prior. That is a “disappointing increase” as the economic recovery continues to slow, Hamrick notes (though notably continued claims—individuals on state unemployment rolls— ticked down by 1.1 million last week). Indeed, economists have long observed the speed of the recovery is slowing: “Without additional support it threatens to stall out or even backslide,” Mark Zandi, chief economist at Moody’s Analytics, recently told Fortune.

But some like Hamrick are concerned that politics have overshadowed the economic reality (including the massive job losses) when it comes to stimulus talks, especially as President Trump falls behind former Vice President Joe Biden in the polls, and the odds of Democrats taking control of the Senate increase.

“While an argument could be made that it should be the economic pressure that’s driving [the push to get a stimulus deal], that is inconsistent at best, meaning the political pressure is paramount,” Hamrick suggests. “That’s why Pelosi is not willing to accept anything or everything because she knows the pressure is most acute on the Republicans and the White House.”

The White House has recently signaled it may be ready to concede on some points of dispute. On Thursday, Treasury Secretary Steve Mnuchin told CNBC’s “Squawk Box” that he would tell Speaker Nancy Pelosi that “we’re not going to let the testing issue stand in the way,”—a key point of contention between Republicans and the Speaker. “We’ll fundamentally agree with their testing language subject to some minor issues. This issue is being overblown,” Mnuchin said.

Both parties are in agreement on issues like $1,200 stimulus checks, more funding for small businesses, and more money for coronavirus testing and education. Instead, the overall price tag is holding up the deal: Democratic leaders want $2.2 trillion, while the White House has offered $1.8 trillion.

Meanwhile, President Trump also said on Fox Business Thursday that he would be willing to raise the stimulus package price tag above the $1.8 trillion mark Republicans have offered, though some Senate Republicans reject such a deal. Some observers argue the White House appears desperate.

“We’ve seen the back and forth that [President Tump has] been engaged in with respect to taking [stimulus] off the table then looking for a piecemeal [deal] then looking for a large deal, I just think that smacks of desperation and a lack of focus,” Bankrate’s Hamrick argues.

The back and forth on Capitol Hill comes against a backdrop of a 7.9% unemployment rate and rising cases of the coronavirus across the country.

And in terms of timing, Hamrick is skeptical a deal will get done this side of Election Day, suggesting “it may well be that something comes either after the election or early [next] year, but in the meantime, it may be the case of many Americans suffering the financial equivalent of famine before federal legislation provides the opportunity for something that’s closer on the scale to a feast.”

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