The Federal Reserve introduced the Main Street Lending Program earlier this year to help small businesses survive the economic shutdown. The program enabled banks to make rapid low fee loans of $250,000 or more to firms and nonprofits that were struggling to access credit due to Covid-19. The average loan size was about $9 million, and the borrowers were all financially sound prior to the pandemic.
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US Debt Hasn’t Been This High Since World War II. That’s OK….for Now (Macro News for October 17, 2020 – October 23, 2020)
The US debt level and annual deficit, expressed as a percent of gross domestic product, approached record high levels set in 1946 immediately after World War II. For the fiscal year ending September 30, 2020, the deficit was $3.13 trillion or about 15.2% of the GDP. The 2020 deficit was more than three times the 2019 deficit. During fiscal year 2020 the US government spent $6.55 trillion and only received $3.42 trillion in revenue. The US debt level is currently about 102% of GDP compared to the record high of 106% of GDP set in 1946.
The US is Adding Jobs. But the Recovery Could Take Years (Micro News for August 29, 2020 – September 4, 2020)
Some economists fear that the US job market could falter this fall if coronavirus cases surge again. To date, the US economy has recovered about 10.8 million jobs lost due to Covid-19. However, about twice that many jobs were lost in March and April during the shutdown. Some experts fear that without a vaccine it may not be possible to add many more jobs.
The Fed’s New Strategy Could Keep Rates Low for Longer Than You Think (Macro News for August 29, 2020 – September 4, 2020)
Federal Reserve Chair Jerome Powell announced a major shift in the Fed's long-term strategy. The Fed will now allow inflation to average 2% over a longer time period. This means that the Fed will allow inflation to run higher than 2% since the period of time following the Great Recession had abnormally low inflation rates.
Pearson Economic News 