Tags: Coronavirus | s&p | economy | spending | government

'No Alternative': S&P Says US Isn't Spending Enough to Save Economy

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By    |   Monday, 20 July 2020 09:21 AM

Shaun Roache, chief economist for Asia Pacific at S&P Global Ratings, believes the U.S. government isn’t spending enough money to save the economy amid the seemingly endless coronavirus pandemic.

Roache told CNBC that while many other global governments have announced large amounts of fiscal support in the wake of the pandemic, some countries, including the U.S., have shown “a degree of fiscal fatigue.”

Roache explained that additional spending will worsen the balance sheets of governments, but it’s necessary to “prevent things from getting even worse.”

“We’re seeing some fiscal policymakers think about pulling back some of their measures or maybe letting them expire without renewing them, and that’s quite a dangerous thing to do when demand in the rest of the economy still remains quite suppressed,” he told CNBC’s “Squawk Box Asia” on Monday.

“So we expect and we hope to see some of those fiscal measures being renewed, pushed forward into the next year. That is going to mean more fiscal easing but at the moment there is no alternative to that,” he added. 

“We’re not going back to where we would have been in the absence of the virus and to a very large extent this reflects a lot of the damage that’s been caused ... to labor markets but particularly to balance sheets and that’s not going to be fixed easily or quickly,” said Roache.

To be sure, Bloomberg recently reported that America’s leaders face an urgent set of decisions on whether to extend history’s biggest rescue effort -- or let parts of it lapse.

The government approved more than $2 trillion of extra spending after the coronavirus brought swaths of industry and commerce to a sudden halt. Some measures targeted those who took the biggest hit, like the unemployed and small business. Others were across-the-board, reaching every corner of the economy.

But these programs are due to run out in the coming weeks and months. Each expiration date will test the still-fragile U.S. recovery -- unless policy makers opt to keep crisis supports in place.

These kind of cutoff dates, when past decisions dictate a big change in net government spending unless further action is taken, are sometimes known as “fiscal cliffs.” They have a history of roiling markets, as politicians take the debate to the brink.

The Trump administration wants another relief bill, with a price tag not exceeding $1 trillion, before lawmakers head out of town for summer recess in early August. The Democrat-controlled House already approved additional measures worth $3.5 trillion, but Republicans who have a Senate majority oppose many of them.

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Shaun Roache, chief economist for Asia Pacific at S&P Global Ratings, believes the U.S. government isn’t spending enough money to save the economy amid the seemingly endless coronavirus pandemic.
s&p, economy, spending, government
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2020-21-20
Monday, 20 July 2020 09:21 AM
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