Goldman Sachs economists said in a note to clients Sunday that they now expect Congress will approve an additional $550 billion in fiscal support this calendar year, with about $400 billion coming before the fiscal year ends on September 30. Goldman also expects another $1 trillion in additional measures over the next two fiscal years.
Goldman had previously projected that Congress would approve another $500 billion in coronavirus relief this fiscal year. That was before lawmakers passed another $484 billion package last week.
“Since we still expect Congress to provide fiscal aid to states, extend unemployment benefits, and potentially do a number of other things, we are increasing the amount of fiscal support we assume in our forecast,” Goldman economist Alec Phillips wrote.
Phillips noted that he and the Goldman team expect the enhanced unemployment benefits Congress provided through July will be extended through the end of the year but cut in half, from $600 a week to $300. “The average regular benefit payment of $370/week is around 50% of an average unemployed workers’ prior earnings, so this would take the total benefit payment from greater than 100% of average earnings to a bit less than 100% of average earnings, which might be necessary to ensure passage in light of last-minute opposition raised by some congressional Republicans shortly before the CARES Act passed in March,” Phillips wrote.
Goldman also expects another round of direct stimulus payments to individuals, a modest boost of about $100 billion to infrastructure spending and about $200 billion in additional aid to fiscally strapped states, far lower than the $500 billion governors have requested.