2 trillion!The biggest economic stimulus in the United States is here. Will direct money pay off?
In the afternoon of March 25th, Beijing time, the US White House and the Senate reached an agreement on a stimulus plan of US $ 2 trillion. The plan aims to protect the impact of the US economic situation and will directly accumulate funds from individuals and enterprises.The largest single economic stimulus plan.The reporter noticed that when this news was announced, it was already early in the morning local time in the United States. The US Senate said it would pass legislation later today.The US $ 250 billion is directly given to individuals and families. The three major US stock index futures stopped falling and rose. The US plans to launch an economic stimulus plan that was announced last Tuesday. The initial total announced was US $ 1 trillion.After a long negotiation, the agreement was finally reached.The plan will inject large amounts of financial assistance into the US economy, which has been badly hit by unemployment, including American workers and families, small businesses, and major internal industries that help respond.The details of the $ 2 trillion stimulus plan have not yet been announced.According to CNN reports, the initial content in the past 24 hours shows that $ 250 billion was used to pay directly to individuals and households, $ 350 billion was used for small business loans, $ 250 billion was used for unemployment insurance benefits, and $ 500 billion was used to payThe companies surrounding the breakthrough provide loans.In addition, the plan will provide US $ 130 billion in funding for severely affected hospitals, and US $ 150 billion for state and local governments that have invested in responding to new coronaviruses.In terms of personal and family payments, according to the plan under negotiation, the income is below 7.Individuals with USD 50,000 will receive direct compensation of USD 1,200 per person, married couples with incomes below USD 150,000 will receive USD 2,400, and each child will receive USD 500.Personal and family incomes have increased, and the fewer payments are planned, the income exceeds 9.A single person of $ 90,000 earns more than 19.Couples without children of $ 80,000 will be excluded from the supplement.Participants in the negotiations also discussed measures to provide unemployment benefits for four months, extending the scope to self-employed workers.In addition, the bill must ensure that small business organizations can provide up to $ 10 billion in loan guarantees to small businesses to ensure that small businesses can maintain wages and pay off debts.Larry Kudlow, the former chief economic adviser, said at the White House press conference on Tuesday that the plan is the largest single aid plan in US history and said the United States urgently needs legislation to boost the economy and provideCash injection and liquidity stabilize the financial market, so the United States can survive the current economic difficulties and challenges.After the news that the stimulus plan reached an agreement, the three major stock index futures in the US stock market stopped falling and rose, and the press was terminated, and the Dow futures rose in price.At 09%, the S & P 500 index futures rose 1.22%, the Nasdaq Futures rose 1.01%.In fact, the plan has boosted the market yesterday.Before the US Congress began discussions on the economic stimulus plan on Tuesday, it tweeted consecutively, saying that Congress must approve the agreement. “The longer it takes, the more difficult our economy will be.”U.S. House Speaker Nancy Pelosi also declared that he is very optimistic that the stimulus plan agreement will be reached within a few hours.In the good news that the large-scale stimulus plan is about to reach an agreement, US stocks rebounded on Tuesday, and the three major indexes all rose sharply. The Dow closed up more than 2100 points and recovered the 20,000 points mark, an increase of 11.37%, the largest one-day increase since 1933.The S & P 500 index rose 9.38%, the Nasdaq rose 8.12%.On Wednesday, the Asia-Pacific market was also exceptionally strong, with the Nikkei 225 index up 8% and the Korea Composite Index up nearly 6%.The average growth of the three major A-share indices in China has ended, and the Shanghai stock index rose by 2.17%, Shenzhen Component Index rose 3.22%, the GEM index rose 3.25%.This year’s GDP faces negative growth. Is large-scale stimulus useful?Under the influence of the epidemic, the market generally expects that US economic growth will decline.CICC’s latest research report has adjusted the U.S. economic forecast for 2020 to negative growth. It is expected that the U.S. real GDP growth in 2020 will be -4%, which will be 1%The deep negative growth in the second quarter, in which the annualized negative growth in the second quarter was 28% month-on-month and a negative growth of 7 per month.4%, and then initially recovered.It is estimated that during the economic downturn in the second quarter, the unemployment rate in the United States may rise up to about 5 alternatives.In fact, the United States has launched an unprecedented economic stimulus policy.In the short term, the Fed has continued to increase overweight easing, and two emergency interest rate cuts have brought interest rates close to zero. On Monday, it announced the opening of unlimited QE, and launched a series of new projects to support credit flows to businesses and consumers.In addition, the Fed has enabled CPFF (commercial paper financing instruments), MMLF (money market mutual fund liquidity instruments), PDCF (primary dealer credit arrangements), TALF (term asset-backed securities loan instruments) and other tools, includingExpand the exchange quota with other long-term liquidity, relax the discount window interest rate and conditions, remove the reserve requirement, and encourage banks to use their liquidity and capital buffer measures.The Fed ‘s monetary easing has almost reached an unprecedented level.This large-scale US stimulus policy is also a supplement to monetary policy.CICC believes that changing the criminal situation will continue to peak in the future, and American real economy enterprises will face a period of high pressure on cash flow dispersion. If they cannot obtain timely financing during this period, they may even be technically bankrupt.For families, their wages and income may fall for a period of time in the future, and some people may even temporarily lose their source of income due to dismissal. However, the family ‘s mortgage and basic living still require cash flow expenses.In this regard, fiscal policy may be more targeted.The direct release of cash to households and the provision of loans to small businesses, etc., may help households and businesses to survive the peak period of the epidemic.However, CICC believes that monetary and fiscal policies are more to help businesses and families to survive the economic pressure brought about by the epidemic, but these are only measures to cure the symptoms.The fundamental solution to the problem is still to prevent the development of the epidemic and quickly enter the “platform period” of the epidemic, allowing the manufacturing industry to resume work, residents to go out for consumption and activities, and normalize economic life.Zhang Ming, chief economist at Ping An Securities, suggested that the Fed’s large-scale monetary easing will help stabilize the financial market to a certain extent, but it is difficult to avoid the gradual recession of the US economy.In fact, the measures announced by the Fed can basically calm the liquidity overlap in the financial market and avoid the panic sell-offs and substitution effects of financial institutions caused by insufficient liquidity.However, the biggest difference between the global financial market turmoil and the 2008 subprime mortgage crisis is that the turmoil is caused by the impact of the epidemic on the real economy.Therefore, unless the US government can introduce strong enough policy intervention to suppress the spread of the pneumonia epidemic in the United States, the Fed will only rely on loose monetary policy and will not calm the turmoil in the financial market.Wang Qing, chief macro analyst of Dongfang Jincheng, believes that if the US epidemic situation is basically controlled in the second quarter of the second quarter, the economy will rebound in the third quarter.In view of the fact that this economic recession is not due to an endogenous resource mismatch, once the short-term exogenous shocks subside and the suppressed consumption, investment and trade activities will recover faster, the risk of the US macroeconomic gradually falling into a sustained recession is not high.In addition to the United States, other countries are also acting.On Tuesday, G7 finance ministers and progressive governors issued a joint statement saying that they will take all necessary measures to restore confidence and economic growth, protect employment, and interfere with companies and the financial system.In terms of monetary policy, G7 takes active actions to support economic and financial stability and improve liquidity, including through mutual currency swaps. In terms of fiscal policy, the G7 finance minister said that it will provide enhanced liquidity and guarantees.Subsidized loans, budget extensions and loan repayment extensions and other measures, and provide funds to affected companies, especially small and medium-sized enterprises, where appropriate.Sauna, Ye Wang Gu Zhijuan editor Wang Jinyu proofreading Li Shihui