- President-elect Joe Biden’s economic advisors fear another recession is looming, The New York Times reported.
- The impasse over another stimulus package and the prospect of millions of people losing unemployment benefits are leading them to press congressional Democrats to pass another aid package very quickly, The Times said.
- The surge in virus cases is causing another wave of restrictions and closures that experts say could deal a blow to the economic recovery.
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President-elect Joe Biden’s economic advisors are reportedly pressing congressional Democrats to quickly strike a stimulus deal with Republicans, fearing the US is on course for a recession as virus cases surge and a new aid package remains elusive.
The New York Times reported on Sunday that the Biden team was also increasingly worried about the prospect of millions of Americans losing unemployment benefits next month, along with the expiration of federal eviction protections and student-loan deferrals.
The threat of a “double-dip recession” is heightening the urgency to reach an agreement on an economic relief package, even if it’s not as expansive as what House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer sought, The Times reported.
The Biden transition team did not immediately respond to a request for comment. A Biden spokesman, Andrew Bates, told the Washington Post reporter Jeff Stein that “this is incorrect” and that “the president-elect fully supports the Speaker and Leader in their negotiations.”
Republicans and Democrats have for months clashed over the size and scope of a stimulus package to prop up the economy. Senate Majority Leader Mitch McConnell has sought a slimmer aid bill similar to the $500 billion measure that Democrats have twice rejected.
Congressional Democrats favor a broader multitrillion-dollar plan that would include $1,200 stimulus checks, $600 federal unemployment benefits, funds for virus testing and contact tracing, and state aid. The impasse threatens to punt the arrival of federal aid until after Biden assumes office in January.
Since his election victory over President Donald Trump, Biden has jumped in on discussions about another economic aid package. On Friday, Pelosi, Schumer, and Biden reiterated their calls for Congress to pass another relief plan before the end of the so-called lame-duck session.
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But a recent spike in virus cases has prompted more restrictions and business closures in many parts of the country, and experts have said a delay in federal aid could seriously harm the economy at a vulnerable moment in its recovery. Jobless claims spiked last week for the first time since October, and new hiring has slowed.
“In the current environment, Mitch McConnell is unlikely to agree to a $2T package,” Arindrajit Dube, an economist and professor at the University of Massachusetts Amherst, said on Twitter. “It’s much better to make difficult compromises than to enter the new year without any relief. At some point we have to cut our losses. Otherwise the pain will be greater.”
Analysts at JPMorgan projected on Monday that gross domestic product would contract in the first quarter of 2021 by 1% on an annualized basis. Goldman Sachs lowered its first-quarter forecast, but it still expects 1% growth next year.