Experts: Trump's COVID-19 aid package too little to help U.S. economy

Experts say the U.S. president's orders would add a "negligible amount" to the economy. /VCG

U.S. President Donald Trump's weekend attempt to sidestep stalled congressional negotiations over the next coronavirus aid package will do little to boost the economy, experts said.

With double digit unemployment, disruption to businesses from social distancing rules, and persistent coronavirus spread, many Americans had been relying on relief measures approved earlier by Congress, but which mostly expired in July.

Trump on Saturday signed executive orders extending financial relief, which would temporarily extend enhanced unemployment benefits at a reduced amount of 400 U.S. dollars a week, defer payroll taxes for some workers, suspend federal student loan payments and potentially provide eviction relief. Even if he can overcome the legal questions surrounding his actions, the efforts may not pack much punch, economists say.

Mark Zandi, the chief economist at Moody's Analytics, calculated the orders could provide just over 400 billion U.S. dollars in total relief. JPMorgan Chase economist Michael Feroli wrote in an email note on Monday that the initiatives could contribute "less than $100 billion" in stimulus.

That's against the one-trillion-U.S. dollars aid package proposed by the Republican-led Senate or the more than 3 trillion-U.S.-dollar aid bill passed by the Democrat-led House of Representatives.

Altogether, the president's orders would add up to 0.2 percent of GDP, a "negligible amount," according to estimates from Lydia Boussour, senior U.S. economist for Oxford Economics.

Millions of jobless Americans could be financially squeezed this month after the expiration of a 600-U.S.-dollar weekly supplement to unemployment benefits.

The president's efforts may not reach all of the workers relying on aid. For example, the 400-U.S.-dollar weekly supplement to unemployment benefits would only apply to people receiving at least 100 U.S. dollars in state unemployment benefits and could exclude some low-income workers. The added benefits, which would be financed by 44 billion U.S. dollars from the Disaster Relief Fund, would only last about five or six weeks, Feroli estimates.

The measure that is most likely to become reality is the extension of a freeze on federal student loan payments, Zandi said. That is set to expire September 30; Trump's measure would extend it through the end of the year.

The step could save borrowers 15 billion to 20 billion U.S. dollars, Zandi estimates. "For the students that's a big deal, but for the macro economy in a crisis, it's really not meaningful."

(With input from Reuters, AFP)