The prospect for $2,000 stimulus checks to those households continuing to reel from the COVID-19 pandemic has gone up in the wake of bruising Republican defeats in the Georgia Senate race, one Wall Street pro argues.
Jefferies economist Aneta Markowska predicated Wednesday that as part of a new $1 trillion stimulus plan, the incoming Biden administration would be able to increase recently sent $600 stimulus checks to $2,000. Markowska also expects added unemployment benefit relief to be extended from mid-March to the end of June and for states and local governments to get $500 billion in aid.
“With Democrats likely to take both Georgia Senate seats, the balance of power will shift significantly and so will the legislative agenda for the next two years,” Markowska said.
Markowska estimates a $1 trillion stimulus plan would boost U.S. GDP by two percentage points over the next two years. Nearly half of the GDP boost would be delayed until 2022 as consumers initially save their new stimulus checks amid ongoing fears of pandemic related job loss, Markowska reasons.
Predictions for more stimulus have become the new norm on Wall Street amid the hotly contested Georgia Senate runoff.
Democrats are on the cusp of taking control of the Senate from the Republicans as Democrat Rev. Raphael Warnock defeated Sen. Kelly Loeffler. Meanwhile, Democrat Jon Ossoff continues to lead GOP incumbent David Perdue in a race that hasn’t officially been called.
If Democrats win both seats, the Senate will be split 50-50 — Vice President-elect Kamala Harris would act as the tie-breaker. In effect, the Biden administration will have greater potential to pass extra fiscal stimulus and an infrastructure bill this year to goose the economy.
Equity markets surged across the board Wednesday on such prospects.
“I think we should expect in this scenario a $500 billion to $1 trillion [stimulus] package getting passed in the first quarter,” Compass Point director of policy research Isaac Boltansky said on Yahoo Finance Live.
Ahead of the Georgia race, Goldman Sachs predicted Democratic wins would sow the seeds of a new $600 billion stimulus plan. The downside to the plan, Goldman warned, are potential tax increases on corporations to fund the government spending.
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