With the current economic slowdown, the news is now so bad it’s good. Or at least part of it.
Reports indicate that the next coronavirus spending deal will include a second round of $1,200 stimulus checks.
According to CBS News:
The House Democrats’ revised stimulus bill would restore some popular programs that were devised to help families weather the coronavirus pandemic. Chief among them: $1,200 per adult stimulus checks targeted to middle- and low-income families.
Democratic lawmakers introduced the measure ahead of negotiations with Treasury Secretary Steven Mnuchin.
While there’s no way to know if this bill will pass, or what’s in it, the news is important to investors.
It confirms that the economy is no longer on a certain path to recovery. Lawmakers could be reacting to the fact that new claims for unemployment are holding steady above 800,000.
Economic Slowdown: Unemployment Isn’t Recovering at the Same Pace
Source: Federal Reserve.
Prior to this year, the record high in new claims was 695,000 in 1982. Claims quickly receded from that level. The current state of the economy is concerning to economists, lawmakers and job seekers. And millions of individuals are now worried about their jobs.
There’s reason to believe more business shutdowns are on the horizon.
The New York Post noted:
As many as half of all New York City bars and restaurants could shutter permanently within the next six months due to the coronavirus, according to a stunning new audit released … by state Comptroller Thomas DiNapoli.
The report lays bare the extent of the pandemic’s fiscal impact on one of the city’s lifeblood industries, which only saw a return to indoor dining on Wednesday — at a meager 25 percent of normal seating capacity.
“The industry is challenging under the best of circumstances, and many eateries operate on tight margins,” DiNapoli said. “Now they face an unprecedented upheaval that may cause many establishments to close forever.”
New York City is not alone. Businesses across the country are near the point of no financial return. Bad news is likely to continue as shutdowns displace millions of workers.
Michael Carr is a Chartered Market Technician for Banyan Hill Publishing and the Editor of One Trade, Peak Velocity Trader and Precision Profits. He teaches technical analysis and quantitative technical analysis at New York Institute of Finance. Mr. Carr is also the former editor of the CMT Association newsletter, Technically Speaking.
Follow him on Twitter @MichaelCarrGuru.