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'Absolute necessity'
But for now, the focus is on keeping American businesses and households afloat. In March, Congress passed a $2.3 trillion stimulus package, the largest in US history. Half a trillion dollars of forgivable loans have been handed out to small businesses. Direct payments were made to low- and middle-income families.
The Congressional Budget Office expects the federal budget deficit will hit $3.7 trillion this year, up from an eye-popping $1 trillion in 2019.
And more stimulus is likely coming, perhaps another $2 trillion later this year, to help out states and local governments battered by the crisis.
All of this will add yet more debt to the pile. But there's no other viable option to stave off further crisis.
"The fiscal stimulus and resulting explosion of the deficit is an absolute necessity to combat the devastating impact from the economic shutdown and to avoid a second depression," said Steven Oh, global head of credit and fixed income at PineBridge, an investment firm that manages $101 billion.
Spiking deficits are also the result of a dramatic loss of tax revenue caused by the shutdown of businesses and 30 million Americans out of jobs.
The federal deficit is expected to hit 18.4% of GDP in 2020 and decline only gradually over the next decade, according to Moody's Investors Service.
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Posted by Erin Burnett to ANT at May 6, 2020 at 7:39 PM
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