Utah Economist: ‘We Need Another Stimulus’
SALT LAKE CITY, Utah – Utah is doing better than most of the country when it comes to managing the economic impact of the pandemic, but another stimulus package is needed, according to Natalie Gochnour, director of the Kem C. Gardner Policy Institute.
“All eyes right now are watching what comes in the stimulus package — at least if you are an economist — because we need another stimulus,” said Gochnour, who also serves as chief economist for the Salt Lake Chamber. “We’re sideways. The virus has intensified. We’ve got nervous consumers.”
Gochnour told the KSL and Deseret News editorial boards that the worst-case scenario would be if Congress can’t agree on a new rescue package before its August recess.
“The dominoes that might fall if you have big hits to the airlines and these tourism entities and restaurant entities that have just been hanging on and can no longer go the distance,” she said. “So you’re in a situation where you’ll have loan defaults and where you’ll get bankruptcies.”
The good news from Gochnour is that she believes the worst is over for the economy as long we get a second federal stimulus and we don’t have a major second wave of the COVID-19 virus.
Because of our diversified economy and strong job market, Utah was well-positioned to weather the economic fallout from the pandemic, Gochnour said. In fact, Utah reported the second-lowest unemployment rate in the country for June.
Senate Republicans on Tuesday gave more insight into their plans for the next aid bill that’s expected to reach above the $1 trillion mark. The legislation would include $105 billion for schools across the country.
“With the majority of businesses expected to exhaust their initial paycheck protection funding this summer, we’ll also be proposing a targeted second round of the PPP with a special eye toward hard-hit businesses,” said Senate Majority Leader Mitch McConnell. “And speaking of building on what worked in the CARES Act, we want another round of direct payments.”
The CARES Act provided payments of up to $1,200 per adult at the beginning of the pandemic. In order to truly activate the economy, Gochnour said such payments need to be directed at those who need them most.
“The higher your income the more likely you are to save that stimulus check and not spend it immediately,” she said. “But they can change that by targeting the stimulus checks to the very low income, and then they become more stimulative.”
Democrats said the GOP plan doesn’t go far enough and are calling for more stimulus funding for testing, enhanced unemployment benefits (which expire at the end of this month) and for state and local governments.
“The Republican proposal appears destined to fall drastically short of what’s required,” said Senate Minority Leader Chuck Schumer. “From all indications the bill will prioritize corporate special interests over workers and Main Street businesses.”
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