The Trump administration is drafting measures to blunt the economic fallout from coronavirus and help slow its spread in the U.S., including a temporary expansion of paid sick leave and possible help for companies facing disruption from the outbreak, according to three people familiar with the matter.
The economic package is still being debated and hasn’t yet been presented to President Donald Trump. Some of its components could change, while others, such as a sick leave plan, may require congressional action.
A small group of White House and Treasury officials worked on the proposal through the weekend, the people said. The timing of any of the economic measures is unclear, but they would likely be rolled out on a step-by-step basis, beginning with aid to individual Americans who are infected, then expanding to companies and workers affected by lost business.
Pressure is growing on Trump to take more decisive action in response to the virus outbreak, as the number of cases in the U.S. and worldwide continues to grow. However, plans still being drafted at the Treasury Department may fall short as the private sector, particularly airlines and cruise companies, clamor for more relief.
So far, the president and his advisers have publicly said the U.S. economy is resilient enough to whether the fallout, instead calling on the Federal Reserve to take action.
U.S. equities tumbled more than 6% Monday and triggered circuit breaker that temporarily halted trading, as a plunge in crude prices rattled financial markets already on edge over the spreading coronavirus. The rout took the S&P 500’s loss from its Feb. 19 record toward 20%, threatening to end the bull market that began 11 years ago to the day.
Turmoil in global markets deepened on Monday after oil prices crashed following a breakdown of talks between OPEC and Russia. Brent crude plunged more than 30%, while bonds surged as investors sought havens, sending the entire Treasury yield curve below 1% for the first time in history. Japan’s yen climbed to its highest level since 2016 against the dollar, while currencies from Mexico’s peso to Australia’s dollar sank.
While the White House has been pointing to the Fed as the front line, economists have stressed that this crisis will require a multi-faceted response from governments, health care professionals, central bankers and others to stem the human and economic damage.
In addition, the scope of central banks to act this time around is limited because of how low interest rates already are. The Fed cut interest rates last week and acted again Monday by boosting the size of this week’s overnight and term repurchase operations to help add liquidity to the markets. But policy makers have urged governments in recent weeks to respond with fiscal stimulus.
Trump and his top economic adviser, Larry Kudlow, have both questioned whether a broad intervention would be needed in response to coronavirus, pointing to a strong jobs report on Friday. But Kudlow said the same day that limited measures might be considered.