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A building near Philadelphia City Hall.
Spencer Platt/Getty Images
Congress would need to spend about $4.4 trillion to help shore up struggling businesses and households during the pandemic to help stave off a floundering U.S. economic recovery.
That is Torsten Sløk, chief economist at Apollo Global Management, about the size of a hole in the American economy some seven months since the pandemic first gripped the nation, causing businesses to temporarily shutter and upheaval to daily life in a bid to slow its spread.
The Federal Reserve has been doing its part, namely by holding rates near zero and keeping up its purchase of government, mortgage and corporate debt to make sure credit flows, perhaps until an effective vaccine for COVID-19 can be developed and distributed.
But only Congress has the power to put money directly into the pockets of unemployed workers or to rescue individual industries hard-hit by the crisis, a point Fed Chairman Jerome Powell stressed again on Thursday, following a two-day meeting of Fed officials.
Read: Powell insists Fed is not out of fire power to support the economy
And while new U.S. COVID-19 cases soar to daily records and the vote counting for the White House and Senate races draws to a close, Congress might want to consider this chart from Sløk, showing the hole still left in the economy by the virus.
How much fiscal help is still needed
Apollo Global Management
The graphic shows how much fiscal aid the U.S. economy likely needs, per Sløk’s estimation, when considering there plunge in gross domestic product and the more than 10 million jobs still lost since the pandemic began.
What’s more, Powell has been focused on recovering lower-wage jobs, including within the devastated restaurant, services and hospitality sectors. But a look at data from this summer also shows a worrisome trend where the return of higher wage jobs has sputtered.
Jobs paying more than $29 an hour stalling
Apollo Global Management
“This gives us some idea,” Sløk said, of the hit to the U.S. economy from the virus and what is needed “if you want to fill that hole,” while speaking at a virtual conference hosted by Princeton University about the U.S. economic and financial markets outlook after the election.
Sløk perhaps is best known for his roughly 15-year stint as Deutsche Bank’s chief economist and for breaking down complex economic trends into visual charts that are easy to digest. He joined Apollo, a global asset management firm, in August.
Despite the postelection rally in riskier assets, Sløk warned that “the economic outlook is still really constrained by what’s going on with the virus.”
U.S. stocks rose for a fourth day in a row Thursday, even without knowing the election’s outcome, with the Dow Jones Industrial Average DJIA, +1.94% advancing 542 points, or 2%.
Wall Street has warmed to the possibility of a Biden White House, but a Republican-controlled Senate, which could mean the Trump administration’s corporate tax cuts stay in place and a smaller fiscal pandemic aid package passes.
Since this summer, investors have been worried about gridlock in Washington around additional pandemic relief since key portions of the roughly $2 trillion Care Act package ended in late July, including $600 a week worth of extra unemployment benefits.
Senate Majority Leader Mitch McConnell said Wednesday that the nation needs another rescue package, and wants it before year-end.
Related: What a Biden or Trump win would mean for a second round of stimulus checks
