The $2.3 trillion coronavirus relief package will create around 1.5 million additional jobs by the third quarter of 2020 and aid the economy’s recovery, according to a new analysis released Wednesday.
President Trump signed the CARES Act into law at the end of March to provide immediate relief to households and affected industries, including through cash payments to low and middle-income households, larger unemployment benefits, and loans and grants to small businesses that maintain their payroll.
The University of Pennsylvania’s Wharton School released a new analysis of the legislation, estimating that the Gross Domestic Product will contract at a 30% annual rate, rather than a 37% annual rate, in the second quarter of 2020 thanks to the relief. In addition, it will keep the unemployment rate from rising to 12%, instead limiting it to 11%.
The Wharton analysis projected the relief package will increase GDP by $812 billion over the next two years, significantly less than the $2.3 trillion that will be spent through the relief package because not all parts of the bill will generate a boost to the demand for goods and services.
“There are limits on the effects of the stimulus because many sectors are simply unable to meet demand due to stay-at-home orders,” the report said.
At least 10 million people have applied for new unemployment benefits in the past two weeks, far more than ever before, and likely many more have lost work. Unemployment is likely higher than it was in the worst days of the Great Recession and set to rise.
One in four small businesses say they are less than eight weeks away from closing permanently, according to polling released Friday by the U.S. Chamber of Commerce.
Already, Democrats and Republicans in Congress are putting together a fourth economic relief package focused on providing more help to the unemployed and small businesses.
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